Monday, 15 February 2021

Minority and women business owners have been disproportionately affected by the pandemic. 

According to a new U.S. Chamber of Commerce survey, minority owners reported “feeling a bigger impact from the pandemic, report assistance being more vital, and have heightened concern about the pandemic's impact." 

Thus far, government interventions have not been made available to minority businesses. For example, in May 2020, according to one study, less than one-half of 1 percent of Black business owners reported receiving government benefits for businesses affected by the coronavirus.

The good news is that the latest stimulus bill, passed in December 2020, intends to better aid minority business owners. Here's how.

More PPP loans

The second stimulus bill includes $284 billion for Payroll Protection Program (PPP) loans, issued by the Small Business Administration (SBA) through approved lenders. Many minority business owners missed out on PPP funds during the first round, largely because they were more likely to enter the pandemic with weaker financial positions and without a recent borrowing relationship with a bank. According to a report from the New York Federal Reserve, the rules have changed to help direct these funds to the businesses that need the most help.

This time around, businesses must have fewer than 300 employees and show a 25 percent decrease in revenue from one quarter in 2019 to the same quarter in 2020, in order to qualify for PPP funds. Most borrowers can receive up to 2.5 times their average monthly payroll cost from one year prior to the loan; restaurants may be eligible for up to 3.5 times their average payroll cost.

The new PPP funds include specific amounts targeted to minority-owned businesses. The legislation set aside $15 billion for new PPP loans and $25 billion for second PPP loans for small businesses that have 10 or fewer employees and are located in low- to moderate-income areas. These may be defined as areas with a poverty rate of 20 percent or higher.

If your business is eligible, you can apply for a new or second PPP loan. If you spend 60 percent of the loan on payroll and utility expenses, the loan may be forgiven if other forgiveness criteria are met. To learn more or apply, click here.

Help for minority business resource groups

The new stimulus bill also includes $15 billion for mission-oriented community lenders like minority depository institutions, SBA microloan intermediaries, community development financial institutions, and certified development companies. All these organizations provide resources for minority-owned businesses and companies located in disadvantaged areas, and these extra funds will allow them to better serve their constituents.

More loans and advance payments

The SBA also offers an Economic Injury Disaster Loan (EIDL) program. Traditionally, this program offers loans to businesses in areas hit by natural disasters, but in the past year, it has offered loans to businesses affected by the pandemic. The new stimulus bill includes $20 billion for this program to offer 30-year loans at a fixed rate of 3.75 percent.

When the pandemic hit, the EIDL program began offering loan advances of up to $10,000 to qualifying businesses. But the program ran out of money, leaving most small businesses without this extra help. With new funding, the program can resume making these loan advances up to $10,000.

Emergency grants

The EIDL program also offers grants, which business owners do not have to repay. Upon applying for a loan through the EIDL program, a business owner can request a grant of up to $10,000. To qualify, the business must be located in a low- income area, have 300 or fewer employees, and have suffered a 30 percent revenue loss due to the pandemic.

Business owners who qualify can get these grants even if their loan application is not approved, and even if they already received a PPP loan. Visit the SBA website to apply for an EIDL loan or grant.

As the pandemic continues, there are a number of opportunities for minority business owners to take advantage of extra help and assistance.

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