Next week, after more than a year, California is expected to lift the majority of its COVID-19 restrictions and reopen its economy to near full capacity.
But as the state braces for a long-awaited comeback, many black business leaders say African-American-owned businesses across the state face a difficult path to recovery.
“It’s a state of disrepair. They need a lot of support, â€said Tara Lynn Gray, director of the California Office of the Small Business Advocate.
Troubled black-owned business operators will need all the financial support available to them, Gray told California Black Media (CBM) at a luncheon hosted by the California Black Chamber of Commerce in Sacramento.
(Black businesses) have been disproportionately affected by COVID-19, â€Gray said. “Fortunately, the governor stepped in and provided $ 2.5 billion in relief funds to all small businesses prioritizing disadvantaged communities of color.”
As of February 2020, there were 1 million black-owned businesses operating in the United States, according to a report from the University of California, Santa Cruz.
About six weeks later, after the start of the global COVID-19 pandemic, the number of black business owners had fallen to 440,000, a reduction of 41%. Many of them have had to shut down their businesses for good.
At the same time, only 17% of white owners have had to shut down their businesses, according to a UC Santa Cruz study. Overall, nearly 4 million minority-owned U.S. businesses, with annual sales totaling nearly $ 700 billion, have closed due to COVID-19.
But despite the grim statistics, a number of small business advocates say financial help is available at both state and federal levels for most business owners.
At a press briefing hosted by Ethnic Media Services last month, speakers discussed how small businesses in California and the country can come out of this crisis, catch the tide of what appears to be an economic boom in course or continue to hover to stay afloat. .
The main objective of the briefing was to help small businesses, especially those owned by minorities, to connect with various funding sources created to help them recover from the pandemic.
The key is to ask for the money, said Everett Sands, CEO of Lendistry, a leading black-led community development financial institution (CDFI) and community development entity (CDE), which is also a small business. and a commercial real estate lender.
“Let’s make a guess. If you’re allowed to open and you can open, then you should be able to receive some type of income, â€Sands said. “What we’ve learned about the pandemic is that most opportunities come a second time. If you look at the Paycheck Protection Program (PPP), it came a third time. But it is important that companies apply.
The Paycheck Protection Program (PPP) is a federal income replacement program designed to maintain small business jobs during the current health and economic crisis. May 31st was the last day for small business owners operating in low income neighborhoods to apply for the third round of P3 loans.
In California, Lendistry has helped thousands of small businesses obtain loans and grants during the pandemic. Funded by the State of California through the California Office of Small Business Lawyer, Lendistry, was the state-contracted administrator of the program that administered six rounds of grants for nonprofit businesses and underserved.
Sands was one of the guest speakers along with US Congressman Ro Khanna (D-CA-17), member of the Congressional Small Business Caucus, and Virginia Ali. Ali owns the nationally renowned restaurant and small black business Ben’s Chili Bowl in Wash., DC
Sands said that before the virus emerged, minority companies were already in a “financially precarious position” with limited resources. Small businesses had limited access to capital, he said, and they lacked the infrastructure to apply for loans or contracts and many of them could not be self-financing in the long term.
But on the cusp of reopening state and US economies, Sands says it’s not too late for companies to regain their financial footing.
“As a result of the US bailout, most states have received around $ 1 billion to help these small businesses increase their revenues,†he said.
Of California’s 4.1 million small businesses, 1.2 million (29%) are owned by minorities. ZIPPIA, an online career support company, has calculated that 10,287 black-owned businesses operate in California. According to ZIPPIA’s June 2020 report, titled “States Most Favorable for Black Businesses,” California ranked fourth before the pandemic. According to data compiled by the Annual United States Census Business Survey, black businesses in California employ approximately 81,530 people.
Gray said restaurants, barber shops, nail salons, barber shops, hospitality and personal care services have been “inexplicably injured” due to social distancing restrictions in the state.
These businesses, owned by many African Americans, were not considered essential when a shelter-in-place order was made mandatory. These are now the companies Newsom intends to help, Gray said.
“Our governor had a difficult choice to make,†said Gray. “You shut things down to make sure people are safe. Public health is a serious problem. I applaud him for that. Yes, there are consequences for our small businesses. But in the end, look at us now. We have the lowest positivity rate in the country. Plus, it looks like our economy is coming back. “
A survey by H&R Block found that out of 3,000 small businesses, 53% of black business leaders saw their incomes cut in half due to the pandemic, compared to 37% of white owners.
Small black-owned businesses continue to experience disproportionate difficulties, with 35% of black entrepreneurs reporting that business conditions are deteriorating. Many say they might not survive for the next three months.
As the reopening of the economy signals progress, Sands is urging black businesses to pay attention to Small Business Administration (SBA) programs that include loans, a restaurant relief fund, and venture capital investments. .
To apply for federal funding for small businesses, Sands says, a business need only show the gross income of the single business. Applicants will not be excluded if the owner has been a borrower on a delinquent student loan or has a criminal history.
“For amounts less than $ 150,000, most of the red tape or the bureaucratic process of a loan has been eliminated,†Sands said.
Khanna said more funds should be distributed through the Saving Our Street Act, which would allocate loans of up to $ 250,000 to businesses with fewer than 10 employees.
The distribution of the money will be based on the racial and gender diversity of business owners, he said, and this should help the economy grow stronger and financially stabilize the country.
“In this next quarter we’re going to have a pretty good recovery,†he said. “Consumer spending is up 10%. I think small businesses are going to come back in force. The problem is that many businesses that have had to close may not be able to reopen. And that’s what we need to focus on: helping with debt cancellation and capital for the businesses that wouldn’t survive. “
