How will minority-owned businesses fare in CARES 4.0?
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Congress and the White House are still negotiating the next stage of economic response to the COVID-19 pandemic. In a Senate hearing Thursday, lawmakers sought more details on why minority-owned businesses benefited less from the last round of stimulus contained in the Coronavirus Aid, Relief and Economic Security Act and what can be done differently.
Black business owners had a particularly rough time getting access to Paycheck Protection Program funds at first, said Ronald Busby, president of U.S. Black Chambers, a body that represents thousands of business owners.
He told the Senate Committee on Small Business & Entrepreneurship that 70% of his members who applied for PPP loans were denied and almost everyone who was approved received less than they asked for.
The problem, he said, didn’t begin with the pandemic.
“Access to capital is the No. 1, No. 2, No. 3 concern for Black business owners,” he said.
Racial disparities in business lending often push small business owners to nontraditional lenders, which focus on underrepresented groups.
“Many, many clients come to us that had a false start attempt with their bank and never got to the end of the process because they just simply weren’t a high enough priority,” said Marla Bilonick, CEO of the Latino Economic Development Center, who testified at the Senate hearing.
Of course, banks aren’t the only source of capital to help start a business or keep it afloat in a crisis.
“A lot of owners borrow against their home equity through home equity lines or use other, you know, family members or their community to help them,” said Robert Fairlie, an economics professor at the University of California, Santa Cruz.
But, said Fairlie, even that approach tends to reveal economic disparities, highlighting the racial wealth gap in this country and the fact that minority communities are already suffering the worst health and economic effects of the pandemic.
COVID-19 Economy FAQs
With a slow vaccine rollout so far, how has the government changed its approach?
On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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