(TriceEdneyWire.com) — “The story of minority-owned businesses struggling to access capital is the story of banking practices that too often exclude people of color as potential customers. A federally guaranteed loan program must not do the same” – states a letter to Treasury Secretary Steve Mnuchin and Small Business Administration head Jovita Carranza from 23 U.S. senators.
The $349 billion Paycheck Protection Program established by Congress earlier this month was supposed to help sustain small businesses imperiled by the COVID-19 pandemic.
The money ran out in less than two weeks.
Then we found that the vast majority of the funding ($243.4 million) went to huge, publicly traded companies instead of legitimate small businesses.
Some of the companies are valued at more than $100 million, have millions in cash on hand, and unlike the legitimate small businesses that didn’t see a dime of the funding have easy access to other revenue sources. Fiesta Restaurant Group, which received a $10 million loan, owns the Taco Cabana and Pollo Tropical chains and operates more than 300 restaurants. The company saw more than $660 million in sales last year. The most highly valued company, Shake Shack, is worth $1.6 billion. Following backlash, Shake Shack returned the $10 million it received.
Determined to get funding to legitimate small businesses, the National Urban League advocated relentlessly making sure the next relief package included targeted relief for the neighborhood-based businesses that have been the hardest-hit by the crisis.
While our efforts have met with some success, much remains to be done.
Our work with Congress resulted in the inclusion of dedicated funding for Small Business Administration Disaster Loans and Grants and for community-based lenders.
There is no question that the aid package that Congress passed this week was much enhanced by the provisions for which we advocated so strenuously. Our movement pushed relentlessly for these dedicated funding pools.
I’m especially grateful for the efforts of Senators Chuck Schumer, Sherrod Brown, Chris Van Hollen, Ben Cardin and Cory Booker. We urge immediate passage in the House and appreciate the work of Speaker Nancy Pelosi and Representatives Karen Bass, Maxine Waters and Nydia Velazquez.
The legislation includes:
*Sixty billion dollars set aside for smaller lenders; and $60 billion set aside within PPP for small and mid-sized banks and credit unions as well as community-based lending institutions. Most importantly, this set aside funding will help ensure that unbanked and underserved businesses can get access to PPP. This includes minority-owned businesses, rural businesses, small mom and pop businesses, and smaller nonprofits that too often have been pushed to the back of the line in the program.
*Sixty billion dollars for SBA’s Economic Injury Disaster Loan and Emergency Economic Injury Disaster Grant program. These emergency programs provide flexible assistance to small businesses to cover operating expenses, including payroll and fixed costs like rent and utilities. These programs had been depleted by the demand created by COVID-19.
These funding pools finally will give unbanked and underserved establishments, including minority-owned and rural Main Street businesses and smaller non-profits, access to funding. These are the businesses that were left stranded when massive Wall Street-backed corporations muscled in on the last round of loans.
The legislation is far from perfect. Notably absent is desperately needed aid for local governments.
Police officers, firefighters and paramedics, sanitation workers: they’re all on the front lines of the pandemic. To abandon these essential workers and leave cities stranded at this moment in history is unthinkable.
(The National Urban League’s advocacy on behalf of small businesses is just one component of our comprehensive COVID-19 response initiative, The Urban League Fights For You. Follow @NatUrbanLeague on social media and the hashtag #Fight4You for the latest, or visit <nul.org>).