In an informal poll on my Facebook pages I asked this question," Do you know of any Black owned business that got a COVID stimulus SBA Payroll Protection Loan?" Of the several hundred responses, only three said they knew a business that had. When I asked for specifics; namely their names and types of business, there was no response.
The respondents expressed disgust, outrage, and deep cynicism, about the program's blatant giveaway to the major corporations who quickly lined up with their hand out for the dollars. The outrage is more than justified. In California, only three percent of small businesses have gotten any funds from the program. This dismal stat could almost certainly be matched in most other states.
The estimated 2.5 million Black owned businesses make up almost one-third of the eight million minority-owned businesses in the United States. Overall, they are nearly 10% of the estimated 27 million total U.S. businesses.
When the SBA Stimulus loan program was announced, there was guarded optimism from some of the Black business owners. Most were small operations with one or two employees including the owner. Nearly all were forced to close their doors under state shelter in mandates. They needed help and help fast.
But then the headlines told of an array of multi-billion-dollar outfits some with ties to Trump grabbing the bucks. Despite the screams of protest, outcry, and rage on social media and in some news outlets about the naked money grab by the biggies, only one was shamed enough by it to give back the money. The few that bothered to try to explain why they asked for and took the money solemnly swore that they would put every penny into employee rehires, salaries, back pay and benefits. Few pointed out that that is exactly what needy legitimate small businesses would do too.
All, though, were within the law to take the money. Industry lobbyists saw to that when they stuffed the small business stimulus package with money for airlines, cruise lines, hotels, and other "essential industries." They also inserted a colossal loophole that defined small business not by the number of overall employees a company had but the number (under 500) at a specific location. They were not finished. Some developed collective amnesia about their pledge to spend the stimulus money on employee hires and wages. They requested that they be allowed to spend the cash on expenses such as mortgage principal or franchise fees and other unnamed expenses.
There is only the vaguest provision in the law for oversight and monitoring supposedly to prevent this kind of rip-off of tax dollars. Therefore, it takes little imagination to know that stock purchases, buybacks, and corporate CEO padding perks and pay-outs could not be far behind. There is absolutely no reason to think that adding another more billions to the SBA loan package will be the life saver small Black or any other small business desperately needs.
The inherent ideological and structural tilt toward the big corporations was built into the package. Wells Fargo virtually confirmed that in a memo that flatly said that it "prioritized" loans to its biggest and supposedly best customers, namely the major firms. It took much heat for its candor and in quick damage control said it would donate the hefty lending fees it raked in to non-profits. At least that is what it said.
The brutal truth is that long before COVID, and talk of small business stimulus packages, Black businesses were a specially endangered breed when it came to getting a dime out of banks and the government. The reasons are well documented, the lack of, credit, proven business track record, resources, expertise, and a long-standing cozy business connection and relationship with the banks. Then there is the dizzying gauntlet of wage and tax forms, documents, and filings needed to qualify for a loan. Much of the work is done online and that means having a computer, computer access, and computer skills to go through the cyber paperwork required.
Countless surveys by business groups, federal regulators, and watchdog groups have produced reams of figures to show that despite the PR lip service lenders pay to wanting to loan to small businesses, the paltry number of loans they make annually to small, and especially minority businesses have remained frozen over the past decade.
The stimulus package could have changed that. It should have provided for direct grants to the most distressed small businesses, a streamlined application process, and a fast track schedule for approval and payout outs to legitimate small businesses. It should have specified that the funds go to a broad segment of small businesses. That did not happen, and we see the devastating result. This is exactly why nearly every respondent in my Facebook poll said "no" to the question if they knew a Black business that got a loan.
Earl Ofari Hutchinson is an author and political analyst. He is the author of COVID POLITICSTrump's Deadly Game (Amazon) He is an associate editor of New America Media. He is a weekly co-host of the Al Sharpton Show on Radio One. He is the host of the weekly Hutchinson Report on KPFK 90.7 FM Los Angeles and the Pacifica Network