Testimony in support of the Business & Entrepreneurship Support to Thrive (BEST) Amendment Act and Further Reforms

The testimony I bring you today is based on my experience working with countless entrepreneurs who are all too often excluded from the system. Yet the concerns I raise today, impact us all.??

Our organization connects problem-solvers with education, mentorship, and capital. Above all else, we are committed to equity, and to this end, we provide wrap-around services, such as childcare, WIFI stipends, and income-scaled program fees.

Yet despite our work, business licensing cost and complexity, the lack of new licenses for street vendors, and strict occupancy permit requirements continue to be insurmountable barriers for many DC-based entrepreneurs.

Today, I urge you to take four critical steps to support DC entrepreneurs.?

• First, to pass the Business and Entrepreneurship Support to Thrive (BEST) Amendment Act,?
• Second, reinstate street vending licenses,?
• Third, get rid of occupancy permit requirements for businesses that do not pose a health and safety risk to their communities,?
• Fourth, waive start-up fees for low-income entrepreneurs.

Our first task is to pass the BEST Act to help DC residents start businesses. I'll highlight three main challenges demonstrating why passing this Act is vital.?

?First, starting a business in DC can be cost-prohibitive.?

Most entrepreneurs dip into their savings to pay for business licenses, but the costs of starting a business often exceed what most Americans have saved. According to the Federal Reserve, 46% of Americans do not have enough cash on hand to cover a $400 emergency expense. While licensing costs vary by type, startup costs routinely exceed $670.

Compared to other major cities, licensing fees in Washington, DC are more expensive than average, especially for food-based entrepreneurs.

The BEST Act lowers the initial license fee to $99 for two years for all license types.?

Second, starting a business in DC is complicated and inaccessible.

DCRA's Small Business Resources Center does a phenomenal job in supporting entrepreneurs decipher which of the 100+ business license types is right for them, but the mere fact that such a center is needed is proof that the process is far too complicated. Moreover, the licenses themselves are outdated. In 2022 there is still a license type for horse-drawn carriages.?

Allow me to contextualize by sharing the testimony of an entrepreneur from Ward 8: "I have multiple degrees and access to powerful networks. Yet even with these privileges, I have spent numerous hours on the phone, scheduling appointments with the business center, and asking colleagues questions about the process. Thankfully I have the privilege of time, but this is not how I want to spend it. I would rather spend that energy building my business versus worrying that I might lose it because of a technicality I didn't even know about. I also want to note that the online systems do not meet accessibility standards. For instance, the https://dcra.dc.gov/page/registration-and-licensing-services-businesses site scored 56/100 and is not in compliance."

The BEST Act addresses complexity by reducing business license categories from 100+ to 10.

Third, businesses looking to renew their licenses in DC face a regressive flat fee.

Why does a multimillion-dollar company like Clark Construction pay the same dollar amount in business license renewal fees as a handyman solopreneur?

The BEST Act establishes a progressive fee structure based on annual revenue for license renewals. Furthermore, it waves the license fees for businesses with $10,000 or less in revenue, providing startups with a chance to start and to grow.

?I believe the BEST Act is a good start; it will begin to deconstruct laws that keep poor people from accessing the economic opportunities that come with business creation. Yet more needs to be done. Complex and expensive business license fees are but one obstacle that entrepreneurs face.

No new street vending licenses are being issued. This represents a significant hurdle for residents seeking economic self-reliance.?

People who operate without a license risk a $2,000 fine, police harassment, and confiscation of goods. This can be a devastating loss for entrepreneurs motivated by unemployment and other economic necessities.

Imagine: you've just lost your job and are trying to make ends meet by selling t-shirts, yet you end up poorer due to the restriction on street vending licenses.

What message does this send? Why is the city punishing grit??

I urge DC to reinstate the issuing of street vending licenses and stop giving police motives to harass street vendors, most of whom are African Americans, Latinos, and other people of color.

Reinstating street vending licenses will kickstart the elimination of statutes that punish grit and ensure an underpaid labor force, thus beginning to provide meaningful opportunities for income mobility.

Now that we have covered the importance of passing the BEST Act and reinstating street vending licenses, I want to share additional reforms that I believe will truly make DC a leader in equitable entrepreneurship.?

The third reform: get rid of occupancy permit requirements for businesses that don't pose a health and safety risk.?

Occupancy permits are a prerequisite for business licensing. Depending on the type of business, home occupancy permits may be available for those who cannot afford an office or commercial space. Yet, unhoused entrepreneurs cannot obtain home occupancy permits (HOP), and renters looking to operate home-based businesses are at the mercy of their landlords or lease agreements.

Alexandra Boycheck, Regional Program Manager for Empowered Women, and International Programs at the Latino Economic Development Center, explains this challenge simply:

"It's high time for the removal of occupancy permit requirements for businesses that do not pose a health and safety risk to their community. Washington, DC has been notorious for the lack of affordable housing coupled with gentrification over the past few years. Entrepreneurs lacking a home occupancy permit have been forced to rent commercial spaces to have their business licenses granted – it goes without saying that the cost of commercial real estate in Washington, DC is out-of-reach to many aspiring entrepreneurs, thus leaving them without a viable option."

This is an equity issue, and its outcome is the economic exclusion of people of low wealth. If you are poor, you may not even get past the first page of the business license application.?

Finally, I urge DC to bet on small business entrepreneurs. By waiving start-up fees for low-income entrepreneurs, you lower the barrier to entry and widen the business opportunities for all residents.

If you genuinely believe in entrepreneurs and income mobility, waive fees for low-income founders. This would allow them to test out their business model before investing hundreds of dollars into licensing, occupancy permits, and incorporation fees.

It is in the city's best interest that these entrepreneurs make it. They will return on the city's investment through taxes, increased employment opportunities, and innovation, as well as a general improvement in income generation opportunities for themselves, their families, and communities.?

Bet on small business. The consequence of keeping the status quo is dire. I've heard from many entrepreneurs choosing to leave the city because it is too hard to get started in DC. Others are simply choosing to operate illegally.

As an entrepreneur from Ward 3 said to me: "I am trapped in poverty. I am 50+; I am not getting hired. The only way I can get out of welfare is through micro-entrepreneurship. Not only can't I afford the fees, but I also can't vend on the street. I am asking the city to help me make it. Waving the licensing fees would be cheaper than housing assistance and food stamps."?

I have also submitted the letters I received from entrepreneurs in support of our petition for change, which was signed by 160 people in a matter of days. -> https://chng.it/x5jscV9r