Most Black-Owned Businesses did not benefit from the PPP loans

Despite the ongoing protest against racial injustice in the United States and the impact of the coronavirus pandemic on black-owned businesses, many black-owned small businesses are still finding it difficult to get the PPP loan made available by the federal government. The recently released $60 billion CARES Act funding set-asides for minority and other underserved borrowers have done little or nothing to help alleviate the situation of black-owned businesses in the United States. Though Black-owned businesses are the worst by the pandemic, they are the less privileged in terms of federal loans. 

In fact, a report revealed that in North and South America, about 2,026 small scale businesses and startups have benefited from the PPP loan. However, among these people, only 64 are black while 1962 are whites. Although the data collected by the U.S. Department of the Treasury and Small Business Administration, reveal that not all beneficiaries of the loan fill in their race, it is quite alarming that out of 2026 who fill in their race, only 64 are blacks. 

The NAACP President Rev. Corine Mack, in his comment on this, said: "It's indicative of what's been happening all over the country for years and specifically, it's indicative of what's been happening here in Charlotte… This is why I'm so vocal, this is why I'm so frustrated and quite frankly, this is why I get so angry."

Mack further said that investing in black communities is essential to ensuring equity in the United States. 

"That's how you create change. Your words mean nothing, they're empty, if there's no action behind the words," Mack said. "Are we invisible? Does our pain not feel like a pain to some folks? When we cry, do you not see our tears? This is a serious problem and it's not just in Charlotte."

The margin is not only saddening but also revealed the extent black people in the US suffer discrimination and marginalization especially in terms of economic equity.  In a statement by Ron Busby, president of U.S. Black Chambers, which advocates for African American businesses and chambers of commerce, he said 

"I hear a lot about making America great again. In order to have a great America, there has to be a great black America. In order to have that, we need great black businesses. We need access to capital."

Also, research revealed that since the outbreak of the pandemic in the United States in March, black-owned businesses are more affected than white-owned businesses. A study on this revealed that more than 40% of black-owned businesses suffer financial setbacks which without some financial support might be forced to close down. However, only 17% of white-owned businesses suffer the same predicament. One would expect that with this statistic, black-owned businesses would be given easy access to PPP loans. However, the reverse is the case as many black businesses are still grappling with the uncertainty of their business continuity. 

In a report by one of the black business owners, he revealed that among the things affecting black-owned businesses from accessing the loan is a lack of proper education on the necessary steps to take and the right button to press to be qualified for it. Most blacks do not fully understand the necessary process needed to be qualified for the loan. As such, many black business owners who applied for the loan are denied.

In addition to Black-owned businesses, the record on the businesses that have benefited from the loan also revealed that among the Carolinas that identified their race, 65 are Hispanic-owned businesses, 92 are Asian-owned businesses, 92 are Asian-owned businesses. Among the beneficiaries of the loan in these states and more, only 16% are women. 

Some controversy over the record

It is important to note that the record on the number of businesses that benefit from the PPP loans is not detailed. There are some business owners who did not fill in their race. However, this is applicable to both the white record and the black record. For instance, a study revealed that a historically Black college, Johnson C. Smith University received a PPP loan of $5 to $10 million, but the name of the institution is not among the 64 names recorded. Also, there are some records of black-owned businesses on Beatties Ford Road who benefited from the loan but did not include their race while filling the forms. 

Among the businesses that did not include their race is Coretta Livingston. Livingston is the founder of Venue At 1801, an event space in Charlotte's Historic West End. When the pandemic hit the United States, she was forced to close her business. Left with no option, Livingston said she applied for the PPP loan but was initially denied with no explanations. Later, her event business received approval and she is currently waiting for the $16,000 to arrive.

"I need that money and I need it now," she said. "I needed it yesterday. As soon as I can put it in my hands, I'll be the happiest young lady probably in Charlotte."

Added to this, Livingston revealed that she only knows six other black businesses who have benefited from the loan.

"It's almost like the big companies, they didn't have to wait," she said. "They got their money, they started spending it immediately and making more money. People like me, we're still waiting."

Another black-owned business located in the same area that benefited from the loan is Fran's Kids Daycare, owned by Fran Witherspoon. Witherspoon said the $85,000 loan she got through PPP helped her maintain her already small employees today. 

"It definitely took a lot of pressure off of me initially," she said.

What is PPP loan?

With the outbreak of the coronavirus pandemic in the United States, small businesses like startup restaurants and retail stores suffer a great financial crisis as they are forced to lock down and stay out of business. Most of these businesses could not afford the luxury of online sales or delivery services, hence they stay completely out of service. 

It is against this background that the Paycheck Protection Program was created to help all small business owners with loans that can help keep their business afloat. The PPP program authorizes up to $669 billion in forgivable loans to help businesses pay their employees and also keep the business running.

PPP loans are also an extension of the US Small Business Administration SBA loans. It is only directed at helping small scale businesses that are worst affected by the pandemic to revive and keep their business going. This is why it is often referred to as a Coronavirus stimulus.

On Friday, March 27, 2020, the President signed into law the CARES Act which provides about $350 billion for PPP loans. Not more than two months after, another $320 billion was provided by Congress in funding for PPP loans.

Aside from being a loan program for small scale business, the loan provides a direct incentive for small businesses to continue to keep their workers on their payroll. This helps to reduce the level of unemployment in the country. 

Also, the US Small Business Administration has granted eligibility to some Additional Qualified Financial Institutions to benefits from the PPP loan.