Jeff Le of Vietnamese Americans for Biden wrote an op-ed from the Courier Times on rebuilding Pennsylvanian minority owned small businesses:
“I moved heaven and Earth. But when I needed help, I was left behind.” That’s what my Philly-based Chinatown friend lamented to me as he failed, along with 95 percent of Chinatown businesses that were shuttered in May, to reopen his family’s restaurant due to the coronavirus pandemic.
Rather than save lives and livelihoods, President Donald Trump fostered a blame-game targeting Asian American communities — claiming these communities were responsible for COVID-19. The president’s referring to COVID-19 as “kung flu” contributed to 2,583 incidents of discrimination and violent acts and to nationwide decimation of Asian American-owned businesses.
Beyond Chinatowns, there was a 22% drop in small businesses nationally — the largest drop on record. Black and Latinx-owned businesses were hit especially hard, dropping 41% and 32%, respectively. These losses are devastating on all jobs. Last year, 1.1 million minority-owned small businesses employed 8.7 million workers, which generated over $1 trillion. Without these businesses, unemployment will increase. The economy will decrease.
With minority-owned small businesses cratering, the president failed to restore our economy. As someone who managed state small business recovery policies during disasters, I see prospects for meaningful reforms. We must take inclusive steps to create investment opportunities for minority-owned small businesses, which will ultimately generate more quality jobs for all Pennsylvanians.
Although the Paycheck Protection Program (PPP) provided loans to many Pennsylvania businesses, thousands of small businesses like my friend’s restaurant still quietly died. And of the lucky Pennsylvania small businesses still around, 41 percent predict recovery will take longer than six months. Sixty-three percent indicated that their businesses might close before January.
According to the U.S. House Select Subcommittee on the Coronavirus Crisis, one reason is fraud. About $1 billion went to more than 10,000 companies that received multiple PPP loans. Some funds were “diverted from small businesses to ineligible businesses or even to criminals,” enriching the privileged few.
Minority-owned small businesses also fear incurring too much debt. Many will have to repay the money with interest, even without spending it, under the program’s rules. This means businesses will likely hurt their chances of securing other financing. As a result, only 26% applied for and received PPP loans. Congress should convert the smallest loans — $150,000 or less — into grants for businesses just trying to survive.
Minority borrowers also experienced discrimination for banking services. The National Community Reinvestment Coalition found that banks treated Black PPP borrowers significantly worse and offered different products 43% of the time compared to white borrowers with slightly weaker financials. Undeniably, minority-owned small businesses couldn’t get loans because banks simply didn’t want to lend them the money.
So why does this matter for Pennsylvanians that minority-owned small businesses face these barriers to capital during COVID-19? A study found that reducing discrimination against minorities increased per-worker economic growth by over 40% after 1960. Inclusive policies resulted in rapid growth with lower unemployment, increasing wages for everyone, including white men without college degrees. To be sure, Pennsylvania’s economy cannot thrive without these businesses.
To support these businesses in your community, ask your Congress member for five changes:
PPP Loan Reform: Forgive loans up to $150,000, expand eligibility towards operating expenses, and make all loan information available.
RELIEF for Main Street Act: Support bipartisan legislation for $50 billion to cities, counties, and states to bolster small-business relief to reach more businesses than if solely through big banks.
Tax Credits: Expand the New Markets Tax Credit, an investment in minority-owned small businesses that are pre-approved as benefiting low- and moderate-income communities.
Business Mentorship: Create cost-free small business incubators for coaching.
COVID-19 Discrimination: Urge civil rights offices to enforce rights violations.
The pandemic and the president’s botched response deepened economic insecurity and disproportionately impacted minority-owned small businesses in Pennsylvania and across America. Without immediate reforms, we’re not going to just lose our favorite Chinese restaurants. We’ll have to move heaven and Earth to not lose an entire generation of Pennsylvania entrepreneurs.
Jeff Le served as Deputy Cabinet Secretary to California Governor Jerry Brown from 2015 to 2019 and oversaw economic development, homeland security, disaster preparedness, and technology issues. His Bucks, Chester, and Montgomery County-based family has lived in Southeastern Pennsylvania for more than 50 years.