What Policy Makers Need to Know About Supporting Local Businesses

Local businesses are more than just charming storefronts and mom-and-pop shops—they’re essential economic engines that generate jobs, build community identity, and keep wealth circulating within neighborhoods. Yet, despite their importance, many local businesses face an uphill battle for survival amid rising costs, corporate consolidation, and shifting consumer behaviors.

As policy makers look for ways to strengthen their local economies, it’s critical they understand the unique challenges—and opportunities—of supporting small, independently owned businesses. Here’s what they need to know:

1. One-Size-Fits-All Policies Rarely Work

The Issue:
Policies designed for large corporations often end up excluding or overburdening small businesses. Requirements for compliance, licensing, and reporting may be easy for a national chain but overly complex or costly for a business with a handful of employees.

The Recommendation:
Create flexible, scalable policies that take into account the size and capacity of local businesses. Streamline regulatory processes, offer tiered requirements, and provide “small business liaisons” to help owners navigate paperwork and compliance.

2. Access to Capital Remains a Major Barrier

The Issue:
Many local business owners struggle to secure funding for expansion, renovations, or even day-to-day operations. Traditional lenders often require collateral or credit scores that small businesses can’t provide.

The Recommendation:
Expand community lending programs, microloan initiatives, and grant funding targeted specifically at local businesses—especially those owned by women, immigrants, or people of color. Partner with local credit unions and CDFIs (Community Development Financial Institutions) to reach underserved entrepreneurs.

3. Commercial Real Estate Costs Are Crushing Growth

The Issue:
As neighborhoods gentrify and property values soar, many local businesses are priced out of the very communities they helped build. Long-term leases are harder to come by, and competition from national brands is fierce.

The Recommendation:
Offer incentives to landlords who lease to local businesses, provide tax abatements for legacy businesses, and establish commercial rent stabilization programs. Cities can also create small business districts with protections against large-scale displacement.

4. Infrastructure and Technology Matter More Than Ever

The Issue:
Small businesses need more than just Main Street foot traffic. They require fast internet, reliable public transportation, and access to digital tools in order to compete in a hybrid online-offline economy.

The Recommendation:
Invest in digital infrastructure, offer training in e-commerce and cybersecurity, and fund local business tech grants. Make sure broadband access is treated as an economic development priority, especially in rural or underserved areas.

5. Procurement Policies Can Be Powerful

The Issue:
Local governments spend billions on goods and services—but much of it goes to national or international vendors. Local businesses are often excluded from bidding due to complex requirements or lack of awareness.

The Recommendation:
Implement “Buy Local” procurement mandates. Simplify application processes for small vendors, set aside contracts specifically for local businesses, and publish transparent procurement calendars to give them time to prepare.

6. Community Ecosystems Make the Difference

The Issue:
Local businesses don’t operate in a vacuum. They rely on community engagement, workforce pipelines, and access to support networks. Without a strong ecosystem, even the best-run business can falter.

The Recommendation:
Support incubators, local chambers, merchant associations, and mentorship programs. Foster partnerships between schools, nonprofits, and business owners. Encourage placemaking strategies—like outdoor dining, public art, and walkable neighborhoods—that draw people to shop local.

In Summary: Supporting Local Businesses Is Smart Economic Policy

When policy makers invest in local businesses, they’re investing in economic resilience, cultural identity, and job creation. These enterprises offer more than products or services—they provide a sense of place and ownership within communities.

The policies that will have the greatest impact are those built with input from local business owners themselves. By listening, adapting, and investing wisely, policy makers can help ensure local businesses not only survive—but thrive.