Stimulus Round 2: Black Businesses Are Behind The 8 Ball of COVID-19 Relief

CBx Vibe:$ave Dat Money” Lil Dicky Feat. Fetty Wap

By Earlene Greene

  • The 2nd Paycheck Protection Program (PPP) set aside $60B for small and medium-sized financial institutions.
  • Bigger banks only approve 29% loans requested by Black business owners

The coronavirus has had a disproportionate health impact on communities of color and the economic toll has been severe for Black business owners having been excluded from the first round of relief. Round two of the new stimulus bill allocates an additional $310 billion to the program and, crucially, $60 billion of that money is set aside for small and medium-sized financial institutions, with the goal of funneling more money to small, rural and minority-owned businesses.

Why This Matters: Unfortunately, large banks processing PPP loans favored businesses with whom they had preexisting relationships. Data from the 2018 Small Business Credit Survey, conducted by the 12 Federal Reserve banks, shows discrepancies in approvals for non-PPP loans. Bigger banks approve 60% of loans requested by white business owners, while Asian, Hispanic and Black business owners  only have their loans approved at 57%, 50% and 29% respectively.

In reality, Black businesses are alone with more than 90% of them not getting their fair share of financial relief

Throughout the COVID-19 crisis, the one frequently repeated mantra is “We are all in this together”. In reality, Black businesses are alone with more than 90% of them not getting their fair share of financial relief, according to Entreprenuer.com. This well-intentioned mantra is elusive for Black businesses who have to fight for their survival. Congresswoman Barbara Lee (D -TX), told CBS News that it can be more difficult for minority owners to establish relationships with large banks processing the loan and gaining access to capital even without a global pandemic. Also, banks may be less willing to provide loans to Black business owners or people looking to set up businesses in neighborhoods with majority-minority populations.

Situational Awareness: It’s no secret that Black businesses continue to struggle and the Federal bailout does not reflect a moral imperative to distribute resources based on racial equity. The fact that black businesses are behind the eight ball on COVID-19 financial relief, means they stand alone when they should be included. This leaves the lingering question: Who exactly is in this together with black businesses?

CBx Vibe:$ave Dat Money” Lil Dicky Feat. Fetty Wap

CONTRIBUTOR

Earlene Greene

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