Ethnic Businesses in the Post-Pandemic: Catching the Boom or Being Left Behind? | Blogs / Reviews
Since the start of the pandemic, 200,000 small American businesses have closed permanently. Access to federal loans was limited. How can ethnic entrepreneurs stay afloat as the country’s economy reopens?
From its location on iconic U Street in Washington, DC, the Ben’s Chili Bowl has served diners for more than six decades: from protesters to the civil rights march led by Dr. Martin Luther King, to African Americans from separate communities, tourists from all over the world, presidents and politicians.
Ben and Virginia Ali opened this place in 1958, and despite all the history it has had, its experiences last year have been unique.
“Nothing has been as difficult as this pandemic – it has been a very difficult time for us,” said Virginia Ali, 87. With her children, she continues to run the small business that offers chili prepared with spices from Trinidad and Tobago, the native land. Ben Ali died in 2009.
“We have lost many friends and seen the impact on many lives that depend on keeping the Chili Bowl open,” Ali said at a press briefing hosted by Ethnic Media Services. He focused on how COVID-19 has affected more than four million U.S. minority-owned businesses with annual sales totaling nearly $ 700 billion, as well as their role in the impending economic openness.
“When the pandemic hit in March, we had the busiest schedule,” Ali said, “with two large groups of students coming to Washington. Even United Airlines had a story (about us) on the cover of his flight magazine, but we didn’t take advantage of it because the flights were no longer in the air.
After opening their business for nearly 20 hours a day, the Ali family downgraded to six days, offered curbside pickup, and donated food to medical staff at Howard University Hospital and Washington Hospital Center. , as well as firefighters, teachers and protesters following George Floyd. death.
“We started getting letters and donations from all over the country, so we took those funds and gave back, cooking lunches for these frontline workers,” Ali added.
Ben’s Chili Bowl received a loan in the second round of the Paycheck Protection Program (PPP), a federal incentive to help small businesses continue to pay wages during the pandemic. The restaurant has had to focus on e-commerce in order to ship their famous smoked salmon with homemade chili sauce across the country, and the family is considering expanding the franchise.
“We are still struggling, but it is good to know that there is help available because all small businesses need it to survive,” Ali said.
May 31st was the last day for small business owners living in low income neighborhoods to apply for the third round of P3 loans.
According to Everett Sands, CEO of Lendistry, a minority-run entity that has helped thousands of small businesses obtain these loans, COVID-19 has exacerbated the already precarious situation of these businesses. They had limited access to capital, lacked the infrastructure to apply for loans or contracts, and could not be self-financing in the long term.
“We have tried to educate small businesses on the different opportunities to receive capital, not just from federal programs, but from state programs,” Sands said, referring to initiatives in New York, Washington, DC and California, which offer secured loans for micro businesses that have no collateral. “As a result of the US bailout, most states received about $ 1 billion to help these small businesses increase their revenues. “
Small business administration programs include loans, a restaurant relief fund, and venture capital investments. To apply, a business only needs to show the gross income of the sole proprietor and is not excluded if, for example, the owner has been guarantor of a delinquent student loan or has a criminal history.
“For amounts less than $ 150,000, most of the paperwork or bureaucratic loan process has been eliminated,” Sands explained. Nonetheless, he clarified that the remaining money is intended for community financial institutions and minority depositories or small banks, usually those with assets of less than $ 1 billion.
According to a study by the University of California at Santa Cruz, 41% of African-American businesses and 32% of Latin American businesses closed in the first months of the pandemic. In addition, nearly 40% of immigrant-owned businesses do not apply for loans because they believe they will be rejected.
In fact, many of the earliest PPP loans were made to multi-million dollar companies that had relationships with banks and factories with up to 500 employees, rather than micro-businesses like dry cleaners. or local nail salons.
“It was particularly difficult for black, brown and Asian communities to access,” said Indo-American representative from California Ro Khanna, member of the Congressional Small Business Caucus. “And so I’m a supporter of the Rep. Ayanna Pressley and Vice President Kamala Harris bill that would set aside funds for these entrepreneurs of color.”
The Saving Our Street Act would provide loans of up to $ 250,000 to businesses with fewer than 10 employees.
Khanna believes that it is possible to distribute the money taking into account the racial and gender diversity of business owners.
“In the 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 where we need to focus: on helping with debt cancellation and capital for businesses that don’t survive. “