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Aug. 16, 2023, 8:35 a.m.

Could “prying open the vault” to small business loans help save local news?

The precarity of local news outlets has left them with “little to no access to capital.” A new report imagines what state and local government, philanthropies, and community-minded institutions could do to change that.

A foundation that has invested millions in local journalism in New York starts a new report with a warning. More than half of American daily news outlets are controlled by hedge funds and private equity firms, which seem hellbent on more painful cost-cutting. The new ecosystem of local outlets that has emerged to fill in the gaps, meanwhile, urgently needs financial resources (cash!) to strengthen business models and grow audiences.

Over the past 12 years, the Charles H. Revson Foundation — originally established by the founder of Revlon, Inc. — has spent $15 million to support local journalism in New York. Those funds have helped launch The City, supported Chalkbeat’s New York bureau, and funded reporting on housing and homelessness at City Limits. When it comes to providing enough resources for a thriving local news industry, though, the foundation believes “philanthropy cannot, and will not, do it on its own.”

In addition to direct funding, the Revson Foundation has helped research and develop a local law requiring city agencies to spend at least 50% of their advertising budgets in community media outlets. Since the bill went into effect in 2020, New York City has bought roughly $48 million in advertising from more than 250 local news outlets. In the first year alone, 50 local newsrooms received advertising from the city for the first time ever. The city of Chicago committed to a similar initiative in 2022.

Inspired by the success of that Advertising Boost Initiative, the foundation has a new report out on financing for local news orgs — and how local and state governments, private financial institutions, and philanthropy could help to make loans and credit programs more accessible.

Let’s start with the obvious. Local news is a precarious business and many outlets have “fragile business models with little to no access to capital because of this precariousness,” as the report puts it. Nearly 75% of small media companies do not have lines of credit or even business credit cards, one survey found. Outlets regularly describe limited resources as the biggest challenge to their growth and financial sustainability.

“We need more revenue but don’t have staff to go out and get it,” one respondent told the Revson Foundation. “We have no dedicated development staff or audience development staff.”

For the report, the Revson Foundation heard from a dozen New York City local news outlets (both for-profit and nonprofit), reviewed data from the Center for Community Media at the Newmark Graduate School of Journalism, surveyed existing lending and assistance programs, and interviewed leaders at government agencies and financial institutions serving small businesses. The report’s first author — Martha King, a senior program officer at the foundation — said small business loans have the “potential to not simply fill gaps but rather to expand revenue and readership” for local newsrooms.

“Loans could be used to cover one-time costs for upgrading technology, enhancing digital presence, marketing, or audience research that would in turn allows the local news outlet to reach more readers and capture more advertising revenue,” King said.

A survey from the news industry coalition Rebuild Local News indicated 65% of the small media companies would use extra capital to hire an ad sales or fundraising staffer. Those hires, in turn, could lead to more revenue and investment. In other research, even the most mission-aligned investors have stressed that early-stage news organizations would be “vastly more attractive” if they paired editorial staff with operational and management team members.

Of the $1.43 billion in Small Business Administration loans that went to more than 3,100 New York-based small businesses in 2022, not one dollar went to a local news outlet, the report’s authors found. Their survey of sources of small business financing — which also includes public credit programs and mission-driven lenders such as Community Development Financial Institutions (CDFIs) — turned up multiple barriers for local news outlets. Some of the obstacles include:

    • Owners have a personal credit score no lower than 680.
    • A demonstrated willingness to use alternative financial resources, including personal assets, before seeking financial assistance.
    • Requiring a down payment of 10-20% and/or collateral such as accounts receivable, equipment, and even personal homes.
    • Restrictions on small business CDFIs lending to non-profits.
    • And high interest rates. The report cited rates from the Small Business Administration as hovering around 10.75%.

There’s evidence immigrant-led outlets have to clear an even higher bar. One immigrant publisher in New York City — where 37% of residents were born outside the United States — said he was told his credit score of 760 was “too low” by a major financial institution.

The current requirements of federal and state small business loan assistance programs make them inaccessible to most New York City-based local news outlets, the report concluded. And while the report focused on New York media, community outlets across the country face similar challenges, said co-author and Revson Foundation president Julie Sandorf.

Mission-driven investors who lend to other kinds of small businesses have not seen seen local news outlets as “a high social impact sector,” possibly because they’ve been obscured by their broader “media” category and the not-so-community-minded examples therein. Rebuild Local News is among those advocating for local news outlets to be included as an essential community supportive service — alongside sectors like affordable housing, childcare, education, and more — as defined by the Community Reinvestment Act that regulates how certain lenders can invest.

“This would go a long way toward incentivizing financial institutions making mission-driven investments to look toward local news,” King said.

Other recommendations in the report include philanthropies partnering with local and/or state governments to create loan funds with lower financial barriers that are tailored to local news outlets and funding case studies that present the credit and equity needs of “best in class” local news outlets across different locations, audiences, tax statuses, and business models. (More successful examples could prompt more banks to extend lines of credit.)

I asked King if anything in the research process surprised her. She mentioned the contrast between the trillion-dollar SBA loan market nationwide and the difficultly that small for-profit local news outlets have had accessing even lines of credit. She also pointed to the cash crunch that news outlets enjoying multiple revenue streams face.

“Even though many outlets we looked at were not reliant on one source of revenue, and they had achieved some diversification of revenue, they still had consistent concerns about financial stability and health,” King said. “To me, this suggests just how much more work needs to be done to give local news outlets the financial stability to do their essential work.”

The full report — “Prying Open the Vault: Public and Mission Driven Financing for Local Journalism” — includes an overview of government programs that serve small businesses as well as details from two community funds with an interest in local media.

Sarah Scire is deputy editor of Nieman Lab. You can reach her via email (, Twitter DM (@SarahScire), or Signal (+1 617-299-1821).
POSTED     Aug. 16, 2023, 8:35 a.m.
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