President Joe Biden’s new $1.9 trillion stimulus package aims to focus on getting the Paycheck Protection Program (PPP) funding to Black-owned businesses. Thing is, will Black businesses apply for it?
The last time around, Black business owners were left behind in the PPP loan offering. Thousands of Black-owned businesses were left without covid-19 small business relief funding, “pushed to the back of the line by more well-connected, larger majority-owned businesses,” according to an Associated Press analysis of Small Business Administration data.
“Many Black and brown businesses did not have the proper paperwork,” said Regina Hairston, president and CEO of the African American Chamber of Commerce of Pennsylvania, New Jersey and Delaware. “A lot of our businesses may have only one or two employees, so they just did not meet the qualifications,” Hairston said in a KYW News Radio report.
A lack of solid relationships with banks hurt Black-owned businesses. Recent Federal Reserve data found that Black business owners are denied business loans at twice the rate of white business owners. The initial PPP program was the first time some Black and Latino business owners had ever requested a bank loan.
Many banks considered applications only from existing customers, the New York Times reported. The PPP application process was run through commercial banks, primarily benefiting those companies with existing relationships, Forbes reported.
On top of this, many Black-owned businesses failed to apply, thinking the PPP program was not real, just hype.
Since there was no outreach to Black-owned businesses to explain the PPP loan process, some owners doubted the program, especially those without well-established banking relationships. The approach taken for the first round of PPP loans perpetuated the racial wealth gap and bred public resentment and distrust, said Ashley Harrington, federal advocacy director of the Center for Responsible Lending, in a Forbes report.
This is not the first time Black communities have been left out of sweeping government reform.
Biden’s new covid-19 recovery stimulus bill includes a new $284.45 billion round of PPP funding aimed at reaching Black-owned businesses — the hardest hit by the pandemic.
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A Goldman Sachs study found that 31 percent of Black small business owners have seen less than 25 percent of their pre-covid revenue return, Forbes reported.
This time around, Black business owners are being urged to apply for government stimulus checks as soon as Congress approves them, and Biden promises to simplify the process to make it easier to apply, NBC Dallas Fort Worth Channel 5 reported.
How fast approval might happen is up in the air, especially since Biden’s proposal faces some opposition. It might not get a vote until mid-March, when the $300 weekly unemployment benefit expires, Punchbowl News reported. House Speaker Nancy Pelosi announced that the House of Representatives would be ready to vote on the bill by the first week of February, Business Insider reported.