As one of the few black-owned hair and beauty stores in the Columbus area, Regal Beauty faced an uphill battle when it opened on East Main Street in Olde Towne East in February. 2019.

The owners Sisters Dasha Tate, 35, and Deanna Jones, 38, said the small business needs to compete with department stores that get better deals from distributors. This meant that they couldn’t get the most popular products in bulk and had to charge more to make a profit.

A sudden pandemic and the resulting shutdown of non-essential businesses complicated their efforts, but they believed they might find some relief through the US Small Business Administration’s Paycheck Protection Program.

Get the news delivered to your inbox: Subscribe to our morning, afternoon and evening newsletters

“We missed the first round,” Jones said of P3 loans, which are canceled as long as small businesses keep their workers employed and use the money for payroll, rent, mortgage interest or utilities.

Although the sisters applied, they received none of the initial $ 349 billion, which ran out in two weeks. A provision in the federal stimulus package allowed large restaurant chains such as Shake Shack and Ruth’s Chris Steak House to receive funding, which they ultimately returned to give small businesses a chance to benefit from the program. (The chains found alternative sources of funding.)

The government then allocated an additional $ 310 billion and set money aside for low income communities. It also relaxed spending restrictions to further increase accessibility.

About $ 130 billion in funding is still available. On Tuesday, the US Senate passed a law extending the application deadline to August 8. The extension requires the approval of the House of Representatives and the signature of President Donald Trump before it can go into effect.

Locally, the Columbus city government and organizations such as the Central Ohio African American Chamber of Commerce have also stepped in to help minority-owned businesses, but the aid may not be enough to ensure their survival.

The racial disparity in government assistance in the event of a pandemic has caused national concern. In April and May, just 12% of black and Hispanic business leaders said in a national survey that they had received the emergency aid they had requested. That’s well below the national average of 38% as reported by the US Census Bureau’s Small Business Pulse Survey. (The SBA has said it will release demographic information on loan recipients in the future as part of a transparency plan.)

Experts attribute this result to historically poor relations of minority-owned businesses with banks, which are the gatekeepers of PPP loans.

“Access to capital is reduced for small minority-owned and women-owned businesses in general,” said Beverly Stallings-Johnson, head of diversity at Columbus.

In partnership with black-owned business newspaper OhioMBE and the Ohio Bankers League, the city’s Office of Diversity and Inclusion has helped more than 150 minority and women-owned small businesses gain access to banks and to PPP applications during the first round of funding, Stallings-Johnson mentioned.

“If you really think about it, that’s the role of the SBA,” she added, “but we’ve injected ourselves because we care about small businesses.”

However, the effort could not reach all companies.

Mayor Andrew J. Ginther’s office is also implementing a recent Executive Decree helping minority and women-owned small businesses secure government contracts and other opportunities. And in May, the city established a $ 5.5 million recovery fund for businesses in low-income and low-income neighborhoods.

Rob Scott of the SBA, an administrator for his Great Lakes region, which covers Ohio and five other states, said the agency has attempted to connect with minority communities by developing webinars explaining the PPP process and making s ‘associating with chambers of commerce and other organizations such as the NAACP.

These entities have had to step in to defend black-owned businesses in some of the biggest banks, said J. Avéri Frost, executive director of the Central Ohio African American Chamber of Commerce and director of a minority business program with the Columbus Urban League. .

“(We said) ‘Hey, you don’t engage with your customers,’” Frost recalls. “’How do we make sure they’re fairly shaken up in the second round? “”

According to the North Carolina Center for Responsible Lending, 95% of African American-owned businesses do not have employees, which presents another problem: Sole owners were had to wait a week before applying for assistance in the first round of financing.

There was also confusion about eligibility, and many business owners weren’t able to hire accountants or consultants, or didn’t know how to seek help from non-profit organizations. lucrative.

“The fight is real for black and brown businesses,” said La’Mier Dennis, 45, of Powell, who owns a photography business. “We don’t know all the different grants, loans or opportunities. … It handicaps you to be able to look beyond the ceiling that we sometimes look at for lack of knowledge.

After missing out on a PPP funding in the first round, Dennis received an assist in the second round, but the future of his business remains uncertain.

“As we all walk into this new normal, I don’t know what a sense of security will look like,” he said.

Although Regal Beauty was left out of the PPP loan program, the company eventually received an economic disaster loan and a grant from the SBA, but that was not enough to keep the brick and mortar location going. . Tate and Jones have moved the business online.

Still, they were luckier than some.

“It’s heartbreaking to see others close around us,” Jones said. “You know that if they had just gotten this help earlier, they could have been with us. We’re lucky we have a way to pivot.

But even though the funding was eventually received, that was not enough to prevent some companies from closing.

“The dollar amount is low for the PPP loan,” Frost said. “It’s not necessarily profitable if you don’t have a lot of employees. And they don’t move that fast (with the treatment). … These companies need immediate cash injections.

The racial wealth gap between blacks and whites affects the small business market. According to a JP Morgan Chase Institute study, most businesses in predominantly black and Hispanic neighborhoods did not have enough cash on hand to cover the equivalent of two weeks of bills.

The poor distribution of public funding has only exacerbated the impact of the pandemic, which could increase economic disparities.

“It’s such a big challenge,” Frost said. “It’s like, where do we start to get to this elephant?” … Everywhere you look, there is a barrier.

[email protected]

@miss_ethompson



Source link

About The Author

Related Posts