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The new $900 billion COVID-19 recovery stimulus bill includes a new round of Payroll Protection Program (PPP) funding of $284.45 billion, with some key changes aimed at fixing some of the problems with the first round. It’s no secret that black businesses have been hit hardest by the pandemic, including Goldman Sachs
Ppp For Minority Owned Business
Finding that they continue to face a difficult road to recovery. The Wall Street firm noted that 31% of black small business owners have seen less than 25% of their pre-Covid revenue. Although 60% of the money businesses borrow under the new PPP must continue to go towards payroll, the remaining 40% could be spent on expanding other spending and will be a game-changer for black-owned businesses.
Here’s What The New Round Of Ppp Loans Means For Black Owned Businesses
CultureBanks reported that in response to allegations that small, women-owned and minority-owned businesses have not had access to PPP in the first place, the new law sets aside a portion of the overall funding for small community banks, credit unions and community banks. and Community Development Finance Institutions (CDFIs). More broadly, CDFI has a special interest in banking in minority communities, revitalizing struggling neighborhoods, increasing local economic activity, and ultimately seeing black and brown entrepreneurs thrive.
Many experts believe that ties between black business owners and big banks have accelerated the collapse of these companies across the country during the pandemic. The most recent Federal Reserve data shows that black business owners do not receive loans at twice the rate of white business owners. Remember, the original PPP program was the first time some black and Latino business owners ever applied for a bank loan, and according to the New York Times
The losses are felt for small businesses in almost every industry. African-American businesses in particular are down 41%, Latinx business owners are down 32%, and Asian business owners are down 26%. Unfortunately, more than 90% of small businesses in majority-black communities only hold cash equivalent to less than two weeks’ worth of working capital, so they have little access to cash when customers are at home and in need. The chances are high. New PPP funding.
Unfortunately, initial PPP payments failed to adequately reach Black and Latinx business owners. In fact, only 2% of African businesses received loans as part of the CARES Act, which funded 4.9 million loans totaling more than $521 billion. The application process was launched through commercial banks, mainly for the benefit of companies with existing relationships.
Powerful Michigan Republicans Get Millions In Ppp While Small Businesses Struggle
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Goldman Sachs found that 31% of black small business owners have seen less than 25% of their pre-Covid revenue returns. The financial firm also noted that 43% of black small business owners say their businesses will run out of cash by the end of the year. A recent survey of Black and Latinx businesses found that only about 12% received the help they asked for.
Some of the new costs covered by the latest round of PPPs could be extremely helpful for black-owned businesses, including installing sneeze guards, purchasing personal protective equipment, switching to outside food and securing the business for COVID-19. Other funds are required to make included. , Funding may also be available for expenses arising from vandalism or looting that occurred last summer. Businesses receiving PPP loans for the first time can apply for a second loan under the new PPP with certain restrictions. The program is still administered by the Small Business Administration, which will release details on how to apply in the coming days/weeks. In credit card news this week: Card balances are rising. How to Earn 6% Back at Walmart and Amazon
OAKLAND, CA – APRIL 15: David Benton … [+] performed at Sugarsweet Cake and Cookie Studio in Oakland, CA on Wednesday, April 15, 2020. Benton’s Bakery has been reduced to pickup and delivery only due to the coronavirus pandemic . (Paul Chinn/The San Francisco Chronicle via Getty Images)
Biden To Revise Small Business Ppp Loans To Reach Smaller, Minority Firms
After a bumpy start, the money is flowing from the Paycheck Protection Program (PPP). As of Friday, May 8, the program has disbursed more than 2.5 million loans totaling $187.1 billion – nearly 60% of the $310 billion available in the second round. This is great news, especially for small businesses and independent contractors who were left out of the first round.
Despite this progress, PPP still has a significant problem. An April 6 report from the Center for Responsible Lending (CRL) found that about 95% African-owned businesses, 91% Latino businesses, 91% Native Hawaiian or Pacific Islander businesses and 75% Asian-owned businesses “No opportunity to get a PPP loan through a major bank or credit union.”
Minority-owned companies have closed for a variety of reasons. They are less likely to have relationships with lending banks, their owners may not have access to financial and legal expertise, or their payrolls may not be as large as those of other businesses. Despite the $60 billion set aside for community banks, along with adjustments to fintech and community bank funding, Ashley Harrington, CRL’s federal advocacy director, said it won’t be enough and that the approach “perpetuates the racial divide wealth and harms the discontent of the citizens. and mistrust”.
This isn’t the first time communities of color have been left out of broad government reforms. This moment gives us the opportunity to take important steps to address and fix a huge problem.
Ppp Loans Are Marred By Racial Inequity
When figuring out how to make a significant change, let’s start with the three As – awareness, acceptance and action. Awareness involves being honest with yourself and the circumstances. Accepting this understanding allows us to evaluate and learn from this experience. This acceptance then leads to taking action on the change we want to make.
I will use this framework to help us explore what we can do to help business owners of color get the funding they need and ultimately strengthen our overall economy. .
People of color have been shut out of government reform for centuries, from Reconstruction after the Civil War to the New Deal during the Great Depression to the Great Recession of 2008. Book The Color of Money: Black Banks and the Racial Wealth Gap
Mehrsa Baradaran takes a deep dive into the history of discrimination in federal programs. The author demonstrates that “the hand that drives black poverty is not physical and invisible, but the coercive hand of the state that consistently excludes blacks from full participation in American capitalism.”
Treasury Names 650,000 Companies That Got U.s. Small Business Ppp Loans
Discrimination does not only affect black and Latino families. In the past, California passed laws against Japanese traders after they became financially successful. Native Americans were killed and their land taken when oil was discovered on it.
When it comes to payroll protection, partner Morgan Simon highlights and explains these gaps for small businesses with owners of color:
These gaps add to the massive damage black and Latino populations are already suffering from COVID-19. According to the Associated Press, African-Americans account for 30% of deaths from COVID-19 where race is known, despite representing only 14% of the population. A detailed profile in The Atlantic reveals how the government’s response to the pandemic reveals a deep bias and a reuse of past repressive systems.
As Ms. Baradaran writes in her book, “an essential first step in addressing the wealth gap is to recognize that it was created through racist public policy.” I hope we can use this opportunity to raise awareness of this real-time problem and help break the growing cycle of this divide.
Shut Out Of Last Ppp Round, Minority Owned Pittsburgh Businesses Get Help Connecting To Needed Funds
Acceptance provides an important intermediate step before taking action. Awareness of a problem is not enough to encourage change. Research has shown that emotion, not logic, drives us to act. This means that simply reading the data is not enough. We must imbibe them and understand that this understanding goes from our minds to our hearts. I believe we can get there by listening to the stories of those most affected.
Real people die. Businesses fail. NBC News spoke with minority business owners who are still struggling to find financing. Anger and frustration go beyond words on the page. “The financial industry hasn’t shown me love in 20 years,” said Terrence Dixon, owner of Terra Cafe, a community-focused restaurant that offers Southern comfort and soul food. “I’m tired of hearing about money,” he said. “I want to see the money.” That frustration, anger, exhaustion and resentment is all energy we can use to make a difference.
This gap affects all of us, not just individual business owners and their families. Minorities own 8 million of the 30 million small businesses in the United States, representing 26.5% of the nation’s small businesses. Businesses are responsible for 7.2 million jobs and generate over $1.38 trillion in the overall economy. Additionally, approximately 68% of the country’s economic growth comes from consumer spending. Businesses that lack capital or capacity
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