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Black-Owned Businesses Abandoned by U.S. Pandemic Response

Black-owned small businesses were widely shut out from accessing PPP loans, yet right-wing disinfo org PV took half a million in public money while decrying direct federal assistance as “radical socialism.” Republicanism in a nutshell. (Also they’re based in Mamaroneck?! 👀) — Alexandria Ocasio-Cortez (@AOC) December 3, 2020

The numbers are in, and it’s painfully obvious: Black and minority business is essential to the U.S. economy, but these businesses are faring poorly, especially during COVID-19, and the government is failing to help. More minority-owned businesses would unquestionably perk up the lagging U.S. economy, but Black and brown people are not fairly represented among business owners. In fact, non-white Americans currently represent about 40 percent of the population, but only 20 percent of business owners with employees.

Research organizations like the Aspen Institute recently shed light on the staggering amount of demographic disparities working against Black entrepreneurs, including onerous student debt, limited access to capital and lingering historical discrimination. Link this with the obvious pain from the COVID-19 economy as economic recession grinds to economic cessation and it becomes clear how thoroughly innovation of minoritized populations is crushed.

Few counter-pandemic government programs are successfully reversing the pain. The $2 trillion pandemic relief package Congress passed March 2020 barely reached Black and brown small businesses, primarily because Congress fashioned the CARES Act stimulus package to be shepherded by large loan agencies like Wells Fargo, which has traditionally ignored minority businesses.

The CARES Act Paycheck Protection Program got stifled by the kind of big banks that overlook businesses they haven’t previously loaned money to, and that certainly includes Black businesses. Banks also allegedly steered cash to wealthy white customers and clients, like GOP-aligned hack Project Veritas, which took home more than $500,000 in PPP loans. Another big company, RPM Pizza, LLC—the largest franchise of Domino’s Pizza in the United States—grabbed $2.25 million from the CARES Act. Also, thanks to its wealthy lender, Comerica Bank, Preston Pipelines Inc. managed to secure $10 million in PPP bailout money, even though California Fair Political Practices Commission asserts company owner Michael Preston had enough cash to make illegal contributions to the political campaigns of former California council members. Preston now faces more than $20,000 in fines.

Black business owners do not come up much while scanning the list of PPP recipients, however, and by April 16, the Small Business Administration’s $349 billion Paycheck Protection Program was exhausted. The SBA approved 1,661,397 loans from 4,975 lenders, and much of it went to wealthy companies.

U.S. Rep. Alexandria Ocasio-Cortez on Twitter pointed out the inconsistency of companies like Project Veritas nabbing a wad of cash while Black businesses sank in a sea of COVID. “Black-owned small businesses were widely shut out from accessing PPP loans, yet right-wing disinfo org PV took half a million in public money while decrying direct federal assistance as ‘radical socialism,’” Ocasio-Cortez said on Twitter. It does not help matters that Black-owned business generally have smaller savings accounts, more debt and are some of the most vulnerable businesses to get hit during a pandemic. Leaders fretted at a Joint Center for Political and Economic Studies forum about the hole congress left Black businesses to fall in.

TV One/Urban One Chairman and CEO and Radio One President Alfred Liggins said African American businesses are “most likely to start out behind the eight-ball”–even the big ones.

“You’d probably be surprised that a company as large as Urban One, which does about $500 million in revenue as a public company—we, actually, don’t have a traditional banking relationship with Bank of America or Wells Fargo. We, actually, ended up borrowing money (because of the pandemic) in the public term loan market. So CitiGroup and Bank of America—those guys don’t lend money to companies like ours. So if we were to file for PPP, we don’t have a banking relationship to get us to the front of the queue.”

If that’s the case for a $500 million broadcaster, imagine the difficulties facing smaller Black businesses, Liggans added, of which 90 percent are sole-proprietorship or have two or three employees.

“So PPP was originally supposed to keep employees employed and they would get that money forgiven. Well, it’s hard to get if you’re an accountant or consultant or a plumber,” Liggans said.

“This is all part of what happens when you’re not including Black communities meaningfully in policy conversations around issues that matter,” stated Joint Center for Political and Economic Studies Vice President Jessica Fulton in Time magazine. “The failures of the PPP could have been resolved from the beginning, if there were folks in the room who were familiar with the barriers Black businesses might face.”

Restaurant associations like the Ohio Restaurant Association have cried foul and are burning up congressional inboxes begging for a second round of Paycheck Protection Program loans, and they’ve got the right idea. The issue, as Fulton told Time Magazine, is the absence of the right folks in the room.

Organizations like Common Cause offer one-click resources to locate your state and U.S. representative. We urge you to learn their names and set their emails and inboxes on fire, then connect with like-minded community programs and activists and add your voice to a wave. There is a new administration moving into DC. It’s time to get in the room.


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