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Paycheck Protection Program adds more challenges for black-owned businesses

by Paula Anderson


A short-term solution to a long-term problem may not be the answer to sole proprietors and independent contractors. 


The Small Business Administration (SBA) developed a program to help business owners deal with the financial backlash of COVID-19. Stay-at-home and shelter-in-place orders shut down the economy and left employers and employees without revenue. 


According to the website, “The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.”


Mark Yates, executive director of the Black Business Association (BBA) said, “One of the challenges of business owners is not having financial records to meet the requirements of the program.”


The CARES Act allocated $60 billion to lending institutions because Congress recognized the need to support vulnerable businesses due to COVID-19.  


Black-owned businesses have been impacted in Memphis and the long-term impact is devastating according to Yates. 



Courtesy Photo of Mark Yates

The BBA is under the U.S. Chamber of Black Business and Yates expressed these comments to Ron Busby, national president, in an email. 


We have a vibrant local small business development ecosystem and we closely align with a number of organizations seeking similar economic development goals. Organizations within this ecosystem rely on each other to gather data, freely disseminate findings and share ideas. Over the course of a few years, we’ve been able to develop data-driven insights regarding Black Business performance trends, opportunities and risks. While performing a back-of-the-envelope analysis – precipitated by COVID-19 -- we quickly got to the potential negative economic impact COVID-19 will have on Black Businesses in the Memphis Metropolitan Statistical Area. Based on our analysis, we calculated the negative impact to be anywhere between $205,000,000 and upwards of $1.250 billion,” said Yates. 


One of the strategies is to position black business owners with financial education and record keeping practices to ensure solvency and accountability. 


“We have developed a strategy to ask banks to help with funding under the Community Reinvestment Act of 1977,” stated Yates. 


This legislation encourages lending institutions to give back in communities where they are located. 


Black business chambers across the nation are advocating for its members and the Illinois Chamber of Commerce has expressed concerns regarding the CARES Act. 


Russell Ainsworth, attorney with Loevy and Loevy, a civil rights law firm based in Illinois, is pursuing a discrimination lawsuit on behalf of black businesses who were excluded due to existing lending relationships. 


According to Ainsworth, banks favored large clients when it came to distributing the funds because they view them as more lucrative customers, thus freezing out African-American business owners who tend to have smaller payrolls and fewer existing banking relationships with large banks. 



Courtesy Photo of Russell Ainsworth

One of the solutions has been to earmark funding to Community Development Financial Institutions (CDFIs) for black-owned businesses. Below is a list of local institutions in Memphis.

To learn more about the Black Business Association, contact Mark Yates at mark@bbamemphis.com."  Paula Anderson is a freelance journalist with Writing by Design Media. She can be reached at writingbydesign7@gmail.com.

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