An estimated 90 percent of minority businesses did not get a nickel from the SBA’s Payroll Protection Program (PPP). For black-owned businesses, the number is even worse, with 95 percent receiving no funding.
In several informal polls on my Facebook pages I asked: “Do you know of any black-owned business that got a COVID-19 stimulus SBA Payroll Protection Program loan?” A handful of people said yes, but most said no. Some expressed optimism that the shutoff of money to black businesses might change with the House passage of an added $3 trillion stimulus package. However, that hope was guarded and cautious.
At first glance, the abysmally low numbers seemed ridiculous. Trump, congressional leaders and treasury officials loudly pledged that small businesses were a prime target of the aid program. There was a litany of much publicized online workshops and town halls on where and how to apply for funding. Many banks announced that they had funds and encouraged businesses to apply. House Democrats sweetened the pot by prying $60 billion out of the loan package for minority banks. Yet, the number of black business people who got money has barely budged.
There is much justified finger-pointing at the SBA, treasury officials, corporate heads and bank lobbyists for lax oversight, few rules on who could get the money, and for earmarking far too much in loans to major corporations. There is equally justified anger at banks for tossing up a mountain of paperwork, tax and business filing documents, and account requirements that small business owners had little chance of hurdling. Then there was the muddle, confusion and constant changing edicts about how the money could be used and what if any of it had to be paid back.
Little has changed except the desperation of countless numbers of near penniless, distressed small black business owners. Overall, the estimated 2.5 million black-owned businesses make up almost one-third of the 8 million minority-owned businesses in the United States.
The clock is ticking on the future survival of these businesses. There is still no clear timetable in many states, counties and cities for when shelter in place rules will end. Even then, there is no guarantee that businesses will be able to quickly open their doors, and when they do that their customers will be back. Many have already closed. Over 100,000 small businesses in early May had reportedly closed permanently. Almost certainly, a significant number of them were black-owned businesses. The worst-case estimate is that a quarter to one-third of black businesses could go under without rapid and dramatic financial intervention from government agencies.
This means flipping the script on what is considered a “priority” business. This label has been almost uniformly slapped on major businesses. It must be applied to small businesses. Streamline the paperwork required and make an iron-clad guarantee that the loan is truly “forgivable.” Making funds immediately available for small businesses is vital to countering the inherent ideological and structural tilt toward big corporations that was built into the relief aid package.
Black businesses have long been an especially endangered breed when it came to getting a dime out of banks and the government. The reasons are well documented: the lack of credit and a proven business track record; few resources; little expertise; and an absence of cozy business connections with banks. Then there is the dizzying gauntlet of wage and tax documents and filings needed to qualify for a loan. Much of the work is done online and that means having a computer, computer access and computer skills to wade through the cyber paperwork.
Countless surveys by business groups, federal regulators and watchdog groups have produced reams of figures to show that despite the PR lip service lenders pay to wanting to loan to small businesses, the paltry number of loans they actually make to small, minority-owned businesses have remained frozen over the past decade.
Black businesses have been a needed engine for employment, wealth building and financial security for many African Americans, many of whom have served as showpieces for black economic achievement and independence.
The colossal failure of COVID-19 relief packages to make the survival of black and minority businesses the priority has been yet another monumental coronavirus tragedy. Time is running out for many black businesses. Show them the money.
Earl Ofari Hutchinson is an author and political analyst. He is the author of “COVID POLITICS—Trump’s Deadly Game” (Amazon). He is also an associate editor of New America Media and a weekly co-host of “The Al Sharpton Show” on Radio One. Earl hosts “The Hutchinson Report” each week on KPFK 90.7 FM Los Angeles and the Pacifica Network.
Tune in to the “The Hutchinson Report Townhall of the Air” at 9 a.m. Saturday on saving black-owned businesses in L.A and nationally on Pacifica Radio, 90.7 FM, streamed at kpfk.org, and Facebook Livestreamed at thehutchinsonreport.