A group of Democratic senators and representatives, which included Sen. Kamala Harris and Rep. Ayanna Pressley, wrote a letter to Treasury Secretary Steven Mnuchin on April 16, asking that minority businesses not be shut out from the coronavirus relief plan. Sadly, that is exactly what is happening.
CBS reports 90% of businesses owned by people of color “have been, or will likely be, shut out.” Ashley Harrington, director of federal advocacy and senior council for the Center for Responsible Lending, a non-profit group that combats abusive lending practices, said, “Roughly 95% of Black-owned businesses, 91% of Latino-owned businesses, 91% of Native Hawaiian or Pacific Islander-owned businesses, and 75% of Asian-owned businesses stand close to no chance of receiving a PPP loan through a mainstream bank or credit union.”
She also added, “"[If] participating banks are requiring that applicants have a credit relationship — to already have some type of loan out — that already cuts many of these businesses out.”
CBS reported back in on April 22 that the Senate took a step to “expand funding for the Paycheck Protection Program (PPP), the main vehicle for providing loans to small businesses to cover payroll and certain other expenses.” Many small businesses were originally left out because they didn't have existing relationships with the large banks that would process the loans and, unfortunately, many Black businesses are not supported by large banks.
The original $349 billion aid package announced by the U.S. Small Business Administration has run out of funds.
Joseph Parilla, fellow at the Metropolitan Policy Program at Brookings said to CBS, "It stands to reason that the way the PPP was structured, approved loans tended to skew toward white-owned small businesses."
Natasha Crosby, a Richmond, Virginia, realtor and independent contractor, told CBS, "I wasn't even able to apply and be in a position to be denied. I was essentially denied from the onset because I had been banking with the wrong bank.”
Hopefully, there will be some relief with a new bill that allocates $60 billion for small and medium-sized financial institutions, which would give money to small minority-owned businesses.
However, there is no word on when the new bill will be voted on.
Photo: Laura Kalcheff