Maryland Technology Development Corp. (TEDCO) will distribute $5 million to local startups that have been hit especially hard by the Covid-19 pandemic, namely rural businesses or those led by socially and economically disadvantaged founders.
TEDCO is offering financial relief to early-stage companies that have been heavily impacted by the ongoing coronavirus crisis and are in need of bridge funding to survive. The funds will be distributed to companies that face the highest barriers to obtaining funding from traditional sources, and that are expected to be able to scale when the current crisis subsides.
TEDCO expects to begin distributing the money in early February, and said additional information about how qualifying companies can apply for the funds will soon be available on its website.
The $5 million was designated for companies that can demonstrate they have experienced some adverse impact due to the pandemic. It was set aside as part of a $180 million state emergency economic relief package announced by Gov. Larry Hogan last month.
“The Covid-19 crisis has significant and potentially long-lasting effects on Maryland’s entrepreneurial ecosystem,” TEDCO CEO Troy LeMaile-Stovall said in a statement.
LeMaile-Stovall said that while much of the relief funding that has been doled out so far by state and federal sources has "rightfully" focused on supporting more established small and large businesses, the impacts of the Covid crisis make this a "make-it-or-break-it time" for many younger companies, like those in TEDCO’s portfolio.
"Startups employ Marylanders, contribute to critical supply chains, and provide valuable revenue to the state and local governments," TEDCO noted in a press release, also adding that the state-backed funding organization's portfolio alone consists of over 250 companies that employ over 2,400 Marylanders.
Businesses that have historically faced difficulty accessing funding from traditional sources, such as minority-owned or women-owned companies or those in rural areas with limited tech and entrepreneurial resources, have also been hit hardest by the negative economic impacts of the Covid-19 pandemic. Data also shows such companies have largely been passed over for the emergency funding distributed thus far.
Recent reports from the Center for Responsible Lending have shown that over 90% of small, minority-owned firms did not receive funds through the federal Paycheck Protection Program. That is, in part, attributable to the fact that many of those businesses are less likely to have existing relationships with bankers and lenders. About 46% of white-owned businesses have previously obtained loans, according to a 2020 Federal Reserve report, while just 23% of black-owned firms have.
TEDCO hopes its targeted relief funding efforts will help some of those early-stage Maryland businesses that have missed out on previous relief opportunities.
