This should have been Terence Dickson’s big moment. He owns Terra Cafe, a restaurant and bar in Baltimore, Maryland. He’d just finished a new outdoor space, complete with fake grass and an old delivery truck he calls “Big Blue” serving as the bar.
“Right now, we would be outside, you would have the jerk grill going on, you would have some music, the jerk chicken would be popping,” he said. “This was it, baby. This was it.”
Instead, Terra Cafe is basically shut down, except for some takeout and delivery orders. Dickson has furloughed five of his 23 employees and used his savings to keep paying the rest. He’s a longtime customer of Bank of America, so when he learned about the Paycheck Protection Program, set up by Congress to help small businesses keep workers on the payroll, he applied on the first day.
On the phone, a banker walked him through the requirements. He had to have an existing account with the bank. “I said, ‘Good, I got you,'” Dickson recalled. He had to do online banking. “‘Good, I got you,'” Dickson said again
Then, the representative said Dickson had to have a credit card or a line of credit with the bank. That, he didn’t have.
“He told me that it wouldn’t work for me,” Dickson said. “I was literally stuck in my car for about 40 minutes, in utter silence.”
Dickson had come up against a big barrier that many other black-owned businesses have also faced. To get the PPP loans out quickly, banks prioritized the customers they knew best, which tended to be larger, more established businesses.
“If you’re a business of color, you have not historically had that relationship with banks,” said Ashley Harrington, director of federal advocacy with the Center for Responsible Lending. “Also, because of that you’re not as aware of the program and how it works, and no one is hand-holding you through the process like they are the wealthier clients.”
There are banks that cater to smaller and minority-owned businesses. The first round of small business relief excluded many Community Development Financial Institutions, which focus on lending in areas traditionally underserved by big banks. The initial $350 billion ran out within about two weeks.
“This is a missed opportunity,” said Lisa Mensah, president and CEO of Opportunity Finance Network, which represents many CDFIs. “You can’t reach the clients if you don’t reach their lenders.”
Congress approved a second round of $310 billion in loans. Banks began processing applications Monday, and many expect the funds to run dry within a few days. This time, $30 billion was set aside for banks and credit unions with less than $10 billion in assets, including community and minority-owned lenders.
“That’s about 97% of all banks and credit unions, so it’s still a crowded pool,” Mensah said.
Since Terence Dickson was turned down, Bank of America opened applications to businesses without an existing line of credit. He’s hoping he gets approved before the second round of money runs out.