Black-Led Businesses Excluded From P3 Lending Program, Owners And Experts Say
Editor’s Note: This is the first in a series of TechWire reports examining the impact of COVID-19 on minority-owned businesses and efforts to provide relief.
ROSEVILLE – Dannesia Pullen is the owner of PullenBoy Hauling, a trucking company headquartered in Rolesville. It transports dry goods and supplies throughout the state.
Business was good at the start of the year. “We were in the process of buying a third truck,” she said. “The shippers and third-party logistics companies were able to give us the rates. “
Then COVID-19 hit. Numerous closed warehouses and distribution centers; the demand for trucks has declined and prices have fallen.
“We’ve seen a 15-20% drop in cash flow,” she says.
Congress authorized $ 660 billion in two rounds of federal emergency loans, including $ 60 billion for minority businesses that struggled to get them the first time around.
But Pullen says she hasn’t seen it and fears being left out. She applied the Economic Disaster Loan and Paycheck Protection Program (PPP), administered by the Small Business Administration (SBA); both times have declined.
“When I see companies like the NBA, Ruth Chris and Potbelly receiving funding, I no longer trust the government,” she said.
Even in the best of cases, minority-owned businesses find it more difficult to access capital. But during a pandemic, many say it gets even more difficult. Lack of resources and access to networks, as well as the government’s “first come, first served” policy, are paying the price.
The Center for Responsible Lending, a nonprofit group that combats abusive lending practices, says that about 95% of black-owned businesses, 91% of Latino-owned businesses, and 75% of black-owned businesses Asians stand “almost no chance” to receive a PPP loan through a traditional bank or a credit union.
“Unfortunately, like the initial PPP funding, most of this new money will continue to go to larger, richer and less diverse businesses, leaving small businesses of color excluded from the program,” said Ashley Harrington, director of advocacy. federal and lead counsel for the Center for Responsible Lending in a statement.
The SBA has not shared loan disbursements by race and does not appear to be following. It did not include “optional standard demographic information for principals” on its PPP loan application form.
But that doesn’t mean that minority-owned businesses are not vital to the recovery of the economy. Before the pandemic, data shows that it was women and communities of color who were driving the growth of new businesses in the United States.
The US Census Bureau released new estimates this week showing 1.1 million employer businesses were owned by women and 1 million by minorities. According to 2018 Annual business survey (ABS), covering the year 2017, 5.6% (322,076) of all US businesses were owned by Hispanics and 6.1% (351,237) were owned by veterans.
Concretely, it is women of color that are on the rise. Businesses employing women in the United States grew by about 2.8% in 2016 to 1,118,863 from 1,088,466 in 2015, the US census reported. The the number of Latino-owned businesses has also increased by over a million, or 46.3 percent, from 2.3 million to 3.3 million. Today, approximately 1 in 7 businesses is run by a Latino entrepreneur.
And these companies deserve the same access to those relief funds, according to the Center.
In a May 15 letter to the SBA, he urged, among others, to set aside $ 10 billion in PPP loan financing to small businesses for loans from community development finance institutions (CDFIs) and minority depository institutions (MDIs). The US Dark Chamber is calling for similar rule changes.
Some have denied, others are waiting
Meanwhile, local groups like Wake Tech and Carolina Small Business Development are setting up funds to help close relief gaps.
For Pullen, it was a lifeline. She received $ 2,000 from the Wake Tech fund, enough to pay her drivers. She was not eligible for the Carolina Small Business Grant because she does not have a storefront.
Still, she says that is enough to tide her over: “As a landlord, I don’t get a salary, so we can survive this period. “
The founder of the Durham tech startup, Kimberly Williams Moore, has also had her funding request turned down. Earlier this year, it launched Ark Mobile, a social network for pets, as well as an app that uses artificial intelligence to aggregate the resources of pets.
“We certainly couldn’t pick up the phone and get a PPP loan,” she says. “What we’re finding out, if you didn’t know some of the staff at these banks, you wouldn’t take the next step. Bankers make choices. We call it “white glove service,” and African American businesses typically don’t get white glove service even before it happens.
Moore, however, does not give up. She will continue to seed the business, while running her own marketing consultancy and looking at other options: “That won’t deter us,” she said.
Gloria Shealey, meanwhile, was a bit more fortunate. She runs The Daniele Company, an African-American-owned commercial construction company in Durham. She received PPP, but doesn’t want to reveal how much.
Before the pandemic, she was on track to slightly exceed 2019 earnings. Now she says her cash flow is “manageable” and that she hasn’t been forced to lay off any of her seven workers.
“Our business is only reasonably good because we’ve been seen as a core business,” she said. Even so, when looking at her peers, she feels that minority-owned businesses are hit the hardest: “There was no intentional program strategy or process for inclusion of diverse small businesses. , local or owned by women. An effort was made in the second round but there was already a benchmark. There are a lot of businesses in general that won’t get over it. “
Latangela Hyman hopes to be one of the survivors. She runs a Christian bookstore and supplies store, A Peace of my Passion, in Knightdale. In March, it saw its revenue drop by more than 70%, and then it was essentially shut down in April, except for a few supply needs. She manages to keep the doors open after receiving a $ 2,500 grant from Wake Tech and a loan from the Golden Leaf Foundation.
“It was an overwhelming experience considering the time we spent in a brick and mortar,” she said. “We pay our store lease, utilities, our software rental invoices, Easter and [other] materials we were unable to sell when ordering home and purchase reopening inventory.