Actionable Ideas for Equitable Small Business Recovery
Gateways Podcast Episode 58
Small business owners across the state reacted in a variety of ways to Governor Charlie Baker’s reopening plan announced Monday. Many decried the incremental plan, saying it would put them out of business.
All small business owners are no doubt hurting, but owners of color have been hit particularly hard—both by the immediate economic impacts of the pandemic, and a disproportionate lack of aid.
Impacts on black small business owners
In early March, when coronavirus materialized as a real threat to the United States, the Black Economic Council of Massachusetts (BECMA) sent out a survey to its roughly 300 members, asking them how the rumblings of a global pandemic affected their businesses. 90% of those respondents, Black business owners in Massachusetts, reported experiencing “a somewhat to severe financial impact.”
Segun Idowu is the executive director of BECMA. “We can only imagine that that number is at 100% now,” Idowu said in an interview on Gateways Podcast.
Already in precarious positions, minority-owned businesses are undergoing stresses exacerbated by the pandemic. Attempting to access state and federal aid has been difficult if not impossible. The federal Paycheck Protection Program (PPP) is specifically designed to provide a direct incentive for small businesses to keep their workers on the payroll. But minority-owned small businesses aren’t getting that relief.
Access to federal relief found lacking
Idowu mentioned a statistic published in an April 6 report by the Center for Responsible Lending. It found 95% of Black-owned businesses in the nation “stand close to no chance of receiving a PPP loan through a mainstream bank or credit union.”
“When Congress passed the CARES Act in late March, there were glaring defects in that bill,” Idowu said. Notably, the funds were distributed on a first-come, first-served basis.
“When we have a first-come, first-served basis on obtaining any kind of funds, you shut out already marginalized communities.”
The Small Business Authority doesn’t collect demographic information on its PPP applications, leaving minority-owned business owners without any kind of advantage that could help level the playing field.
BECMA is calling on Congress to provide a specific carveout for minority-owned businesses in the next stimulus package. On the state level as well, Idowu said, little has been done to provide relief to minority-owned businesses. Idowu said the state has gone “over and above” in providing care for frontline workers and keeping up consistent communications on best practices for safety.
State relief programs not targeted enough
“But when it comes to businesses, it’s been a little lacking.” He cited the Massachusetts Growth Capital Corporation’s Small Business Recovery Loan Fund – a program designed to distribute $10 million worth of loans to small business who applied. It launched March 16, and applications closed just three days later.
“They received 4,000 applications that displayed a need for $135 million, and the state just was not prepared to offer that kind of money,” Idowu said.
In late April, BECMA joined with over 80 other state organizations who signed a letter to Governor Baker calling for the state to set aside $150 million for small business relief and recovery.
Many minority-owned businesses are in industries that are the most severely affected by the pandemic and will be affected for the longest time moving forward. “So many of our businesses are microbusinesses, and they’re in the areas of hair care, personal care, restaurants, etc., and all of these require in-person contact,” Idowu said.
While small business owners of color await potential aid from the federal and state government, BECMA seeks to offer support to owners who can’t conduct in-person business.“It’s important that we’re helping our businesses either pivot to doing their business virtually or helping folks to sunset their business and discover other industries to go into to use their transferable skills.”
The episode transcript is available here: GW Episode 58.