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Initiatives Aim to Help New Small Businesses Gain a Foothold in Downtown State College

The 100 block of South Allen Street in State College on May 3, 2024.

The 100 block of South Allen Street in State College. Photo by Geoff Rushton | StateCollege.com

Geoff Rushton

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Since being hired as the retail and commercial business advocate for the Downtown State College Improvement District a year ago, Kendra Kielbasa has seen up-close the challenges that first-time businesses can face before they can even open their doors.

The complexity and costs that go into opening a business are among the biggest hurdles, she says. Now the DSCID and State College Redevelopment Authority are working on a new program that would provide financial assistance and professional support to reduce barriers and help businesses launch with a strong foundation in the downtown.

“One of the challenges that businesses have, for first-time businesses coming into the area, is the barriers that are created by the complexity of permitting, code, architectural, engineering design,” Kielbasa said at the Redevelopment Authority’s April meeting. “These are some real challenges, and I have observed businesses really struggle with that… More often than not, it’s really that small, first-time business owner that’s going into brick-and-mortar space.”

The DSCID and Redevelopment Authority are planning a Retail Launch Program for first-time retail businesses or small businesses that are newly relocating to the downtown.

While not yet finalized, it would provide dollar-for-dollar matching funds up to $15,000 to assist with critical startup costs such as architectural and engineering design; fees for planning, permitting and code applications; and legal support for lease agreements and zoning compliance. Funding is expected to come from at least $100,000 set aside by the Redevelopment Authority for business development.

“It’s not just removing the barriers for those businesses, but it’s also creating a pipeline of a more educated business owner coming in,” Kielbasa said.

It would facilitate connections with service providers, like attorneys, architects, engineers and code experts, as well as the relevant agencies like the borough planning office and Centre Region Code Administration. Funding for the program participants would be disbursed directly to the providers they use for the needed services.

“So, say one of our professional providers provides an invoice for $7,000,” Kielbasa said. “We want to see that the entrepreneur is writing a check for $3,500, and then we will send a check for $3,500.”

Kielbasa said she is hopeful the program can launch in the summer and within a year be supporting five to seven businesses.

Applicants would need provide a business plan with financials and commit to a lease of at least 24 months. A review committee will select projects, and Kielbasa said she envisions it including Redevelopment Authority, DSCID, Small Business Development Center, commercial lending and service professional representatives.

Some applicants may not have a solid business plan yet or the necessary financial backing, and will be able to work with the SBDC to try to get there with the needed capital.

“I’ve had countless entrepreneurs say, ‘Well, we’re ready to open a space.’ And they’re not at all,” Kielbasa said. “Sometimes even with encouraging them to do the business plan with financials, it can drag out for months. And by the time they actually do the work … there’s no funding that will go to that. So an entrepreneur understanding that early in the process is not a no for them. It’s them saying, ‘This is what I need to do to prove that I’m ready for capital.’ So, again, this is educating, really starting a more educated early entry business launch.”

Kielbasa also acknowledged that the cost of rent for many downtown State College spaces may prove too high a barrier for some businesses.

“When you’re talking like true retail, let’s say clothing, your monthly lease amount should only be about 10% of your monthly revenue,” she said. “Well, that [needed monthly revenue] could be $100,000 to $200,000 for some of our spaces a month. And bringing in revenue, it’s not always as simple as it seems.”

For those that do open under the launch program, the committee will review quarterly financial reports and determine if the business could benefit from other support.

“We’ll have a team that’s not only reviewing the applications, but also with me at that quarterly report,” Kielbasa said. “Where are their challenges? Where can they use some support? If they need help with marketing, I’m going to connect them to marketing services. If they need some mentoring, I’m going to connect them to that. One of the things I’m already doing a lot of is connecting businesses to resources. If I can’t provide it, if you don’t have the expertise, we are making those connections.”

The planned Retail Launch Program is one of several initiatives that DSCID has undertaken to support local businesses downtown. In addition to consultations with existing and prospective business owners, making connections with resources and efforts to activate vacant spaces, the DSCID partnered with Comet Properties starting last year on a Calder Way Pop-Up space.

The pop-up space at 236 E. Calder Way has created a location for rotating retail vendors to sell their products and test the brick-and-mortar environment.

The program has already seen one major success story. After operating a pop-up shop last fall, proprietor Lisa Farren opened the new clothing and gift shop Town Pride State College in April at a more permanent space next door at 240 E. Calder Way.

“It was a great success because it shows that the pop-up shop is doing exactly what we intended it to do: for businesses to come into a real retail-like situation to see if their product works, how they market, what are the things they need to work on, to tweak, with the ultimate goal of some of those launching into permanent lease spaces, which is exactly what’s happened here,” Kielbasa said.

Some pop-up businesses won’t transition to a permanent physical location, but learning about the retail environment is an important part of the concept, Kielbasa said.

“Part of the process is just as important for them to understand where their concept isn’t really viable for a brick-and-mortar space,” she said. “And so that is just as important to us as well, is supporting that understanding so that when we do bring businesses in, our goal is that they’re here longer than three years and beyond.”

This year’s lineup of vendors for the pop-up location is being finalized, and Kielbasa expects that some will have two-month stays, as opposed to one month last year.

“Part of that is putting expectations on not only a certain amount of hours that the shop needs to be open, but certain hours of the day, particularly key days — we’re talking Thursday, Friday evening and Saturday — because we’re looking for this to be a little more competitive, so that we’re bringing in tenants particularly in key months that are most likely or have the greater propensity to move into full-time spaces in our downtown,” she said.