• June 24th, 2024
  • Monday, 06:31:07 AM

Survey of Black, Latino Small-Business Owners Reveals Dire Economic Future

Source: Global Strategy Group for Color of Change and UnidosUS



Amidst mounting death tolls in their communities, Black and Hispanic small-business owners, and the employees and customers they sustain, face a startling prospect: without swift and adequate governmental assistance in the next six months, almost half say their businesses, under current circumstances, may not have enough funds to survive the largest economic downturn since the Great Depression. These small-business owners cite a broad array of issues with accessibility to ongoing federal relief measures — only around 1 in 10 received the funding they requested — which is potentially driving overwhelming support for direct federal assistance, including for payroll, mortgage, and rent support.

The findings are taken from a nationwide survey — the first quantitative assessment of COVID-19’s economic impact on both Black and Hispanic small-business and non-profit owners — conducted by Global Strategy Group for Color of Change and UnidosUS. In the absence of any reporting of demographic data for the Paycheck Protection Program’s (PPP) applicants and recipients by the Small Business Administration (SBA), this survey is the clearest picture to date of the program’s effectiveness for Black and Latino small-business and non-profit owners.

“The survey offers much-needed data, and it backs up what so many of us already know: the Small Business Administration’s Paycheck Protection Program is a driver of racial inequality, rather than a means to provide desperately needed relief for the small businesses at the heart of Black and Brown communities,” said Color Of Change President Rashad Robinson. “Corporate banks must be held accountable for the way they spend taxpayer money; we cannot let them off the hook for rampant discrimination, especially in this moment of economic crisis. Congress must act to ensure tracking and oversight of who is getting the money and who is being denied, and ensure that the American public is not subsidizing another bailout for reckless and self-interested corporations.”

“The survey offers much-needed data, and it backs up what so many of us already know: the Small Business Administration’s Paycheck Protection Program is a driver of racial inequality, rather than a means to provide desperately needed relief for the small businesses at the heart of Black and Brown communities.”
Rashad Robinson, Color of Change

Despite two rounds of PPP support, 45% of Black and Latinx small-business owners who are still in business reported that they will have to shut their doors by the end of the year, if not sooner. Small-business owners with full-time employees report forced cuts to their payroll obligations, including reduction of hours (44%), lay-offs (21%), reduced wages (13%), or furlough (6%).

“This ground-breaking poll shows that African American and Latino small businesses — the economic engines of many cities, small towns and communities across America — are suffering greatly but are being left out of relief efforts. This includes, from our own internal research, small businesses like the community-based organizations that make up the network of UnidosUS Affiliates that are on-the-ground lifelines fighting to provide much needed services while trying to stay afloat. This is simply unacceptable,” said Janet Murguía, CEO and President of UnidosUS. “The next stimulus and relief package must have targeted help to minority-owned businesses and nonprofits so we can save these vital enterprises.”

Fifty-one percent (51%) of Black and Latinx small business owners surveyed report applying for less than $20,000, but only 12% say they received the full amount of assistance requested. More than three times that number — 41% — report being denied assistance, while 21% say they are still waiting to hear if they will receive any assistance. Of the small-business owners of color who received either partial or full assistance, 45% say they had to wait more than two weeks to receive their funds. Survey respondents cited several barriers to accessibility: of those who decided not to apply, respondents cited an application process that was too difficult to complete (14%); concern that they were ineligible for the programs (32%); and belief that they would not be approved (26%).

“The failed execution of PPP by the Small Business Administration and major financial institutions underscores a historical pattern of American capitalism: the consistent exclusion of Black people from full participation,” said Mehrsa Baradaran, a law professor at the University of California, Irvine. “This crisis has already inflicted terrible damage, both in terms of lives and wealth lost, and changes should be made immediately if we want to emerge into a better world. First and foremost, Congress must remove the banks out of the equation and offer direct financial assistance to business owners of color for necessary expenses.”

While the CARES Act, which created the PPP program, receives support from 91% of all Black and Hispanic small-business owners, it is largely seen as a first, but wholly incomplete, step toward economic recovery. Survey respondents believe that the stimulus was passed primarily to protect major corporations’ best interests (82%), with too many handouts to big corporations (74%) and too little funds for small businesses (71%).

As Congress considers another round of stimulus, Black and Hispanic small-business owners identify the following priorities:

-Receiving direct federal assistance to prevent mass layoffs and keep them afloat so they can quickly and safely restart and rehire their workers (89%)

-suspending foreclosures on individually owned and small business properties until the end of the crisis (86%)

-directing federal financial assistance to businesses to help them cover salary and other necessary costs (82%)

-suspending negative credit reporting until the end of the crisis (81%)

The survey adds to growing evidence and anecdotal reports that the PPP Program, administered by the Small Business Administration (SBA), has offered insufficient support to small-business owners of color. A May 8th report by the SBA’s Inspector General found that, despite specific instruction in the CARES Act, the SBA had not communicated to lenders that business owners in underserved markets should be prioritized. Additionally, the Inspector General’s report found that the SBA had failed to “require demographic data to identify PPP borrowers in underserved markets,” meaning that “it is unlikely for SBA to determine the loan volume to the intended prioritize markets.”

A summary of key takeaways can be found here.


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