Category: HBA in the News - Harlem Business Alliance

Regina Smith as the special guest on WHAT’S HOT! HarlemAmerica with G. Keith Alexander

Community, Entrepreneurship, HBA in the News, Regina in the News

Regina talks about the resources available for new and established small business owners. And, talks about the workshops available for people wanting to get into the Cannabis business, and which license to choose.

View the Episode HERE: https://www.harlemamerica.com/whats_hot_episodes/whats-hot-harlemamerica-with-g-keith-alexander-s2e12-regina-smith/

June 6, 2022

Harlem World Magazine: The Effects Of MRTA On The Black Community From Harlem To The Hudson

Cannabis, Economic, HBA in the News

Black-owned businesses, cultural organizations, and community organizations across the state of New York, led by the Harlem Business Alliance, are racing against the clock to modify major pillars within the Marijuana Regulation and Taxation Act (MRTA).

MRTA may be passed any day now by the NYS government.

“Never again should we allow our entrepreneurial industries led and operated by Black people to be taken from us, such as “numbers” invented by Casper Holstein that employed more than 100,000 Black and Brown people across the five boroughs. Marijuana cannot go the same direction,” says Walter Edwards, Chairman, Harlem Business Alliance.

Harlem Business Alliance and Firehouse Harlem along with a growing list of Black New Yorkers, from MOST HARMED communities including Bedford-Stuyvesant, Brownsville, East New York, Harlem, Lower East Side, South/Central Bronx, South Jamaica, and other Black communities in Long Island, Westchester and Upstate NY are uniting to push this campaign to modify MRTA now. These communities are still reeling from long-standing systemic racism and all of its byproducts – i.e. red-lining, pipeline to prison, mass incarceration, and more.

Read At: https://www.harlemworldmagazine.com/the-effects-of-mrta-on-the-black-community-from-harlem-to-the-hudson/

March 23, 2021

Op-Ed: Changing the Face of Cannabis Ownership: A 6-Point Plan for Black Equity in the Industry

Cannabis, HBA in the News, Regina in the News

By Regina Smith – 3/13/2019

Oakland, Calif., native Tucky Blunt was arrested 15 years ago for an $80 marijuana sale that ended up changing the trajectory of his life. He was slapped with 10-year felony probation, legally giving law enforcement officials the agency to search him at any time. Years later, the 39-year-old turned lemons into lemonade and is now capitalizing off of the same product that led to his arrest—by opening his own marijuana dispensary dubbed Blunts and Moore.

Blunt tried to enter the industry on his own but struggled with the high cost of entry and information gaps that hinder black people from entering the business as owners. He was able to pursue his entrepreneurial dreams through participating in an equity program established by the city of Oakland designed to help residents who were most harmed by the War on Drugs with assistance, support, and resources to step into the cannabis industry.

For many people like Blunt and others living in black communities throughout the country, selling marijuana was utilized as a means for survival. The men and women involved in the underground industry relied on it to provide for themselves and their families. Many of those individuals are sitting in prison cells today—some have been for decades—as they watch the white community capitalize and monopolize an industry that was built on their backs.

According to a 2017 report released by Marijuana Business Daily, 81 percent of cannabis business owners are white, while only a mere 4.3 percent are black.

As legalization moves forward in several states, it is imperative that communities most harmed not only have a seat at the table in the cannabis industry but benefit from it the most. There needs to be social restorative justice. How do we ensure that there are more narratives of success like Blunt’s? How do we guarantee that legislation encompasses social and economic equity which addresses decades of oppression and unjust criminalization? What do we do to make sure black folks are the leaders of the cannabis industry rather than only relegated to roles of consumers and workers?

While lawmakers in New York are eager to push legalization forward—especially Gov. Andrew Cuomo, who says cannabis legalization will be at the top of his list within his first 100 days in office—it’s crucial that the ravaging impact the War on Drugs has had on the black community is examined and regulations that would be instrumental in leveling the playing field in this industry are implemented. Black elected officials in New York say they will block the legalization of marijuana if legislation doesn’t prove to be beneficial for their communities. They want to ensure that black and brown folks get their fair share of the expected $3 billion in revenue from adult use (recreational) marijuana and prevent missed opportunities at economic justice, as we’ve seen in other states across the country where marijuana has been legalized. Gov. Cuomo and New York City Mayor Bill de Blasio must ensure reparative measures are at the top of their cannabis legislative agenda.

Inspired by the 10-Point Program created by the Black Panther Party 53 years ago, which served as a foundation for the ideologies, beliefs, and needs of the black community to overcome injustice in America, the Harlem Business Alliance has developed a Six-Point platform to ensure that the government creates equitable economic opportunities in this industry for black people and that black communities are protected from mega-million dollar cannabis entities.

1. Equity applicants

The War on Drugs didn’t just affect those who were arrested and incarcerated; mass criminalization tore apart families and forever changed the neighborhoods primarily occupied by black people, impacting millions. Individuals from communities most harmed who were arrested, convicted and incarcerated, and their families should qualify as equity applicants. Longtime residents who lived in these communities in the decades prior to 2000 should also qualify.

2. Funding

To fiscally address the damage done, the government needs to provide monetary resources for communities that were most harmed. There should be sufficient funding provided—on day one—for equity applicants to create a sustainable business that employs community residents, particularly the individuals most harmed. It’s crucial that there is an immediate investment in protected communities.

3. Tax revenue

All tax revenue from cannabis companies should be allocated to communities most harmed. There is a direct connection between marijuana incarcerations and low income, racially isolated, and underserved communities. Every available dollar is necessary to reverse the results of racism, financial and banking “redlining,” underachieving schools, high rates of unemployment and public assistance, and substance abuse.

4. Vacate convictions

Like Blunt—who was able to overcome his past and step into success in this industry—there needs to be a clear pathway put in place for those who have past marijuana offenses. This includes the expungement of all marijuana-related convictions. Furthermore, there should be no restrictions on applicants who have been convicted of nonviolent crimes to own businesses or licenses or to work in the industry.

5. Equity incubators

The Harlem Business Alliance has been instrumental in educating and empowering black entrepreneurs. In an effort to increase representation in cannabis business ownership, it’s imperative that the government team up with culturally sensitive and competent, community-based organizations—that have a track record of fostering economic initiatives—to be incubators. Providing these organizations with substantial funding on day one is an essential component of moving this effort forward.

6. Leveling period

The cannabis industry is moving at a quick pace and we can’t afford to leave black communities behind. There needs to be at least a three-year period of exclusive licensing opportunities for equity applicants, as well as a 10-year leveling period for black entrepreneurs with exclusive rights to own and operate a business within the boundaries of communities most harmed.

It’s almost April and we’re in the final push to get our voices heard and demand our equitable share. Get involved. Pen a letter to your local officials and show up to hearings and rallies with advocacy initiatives like the Start SMART campaign. There are events happening almost every day where you can educate yourself. Join meetup groups like ours, the Green Revolution, and stay informed. It is incumbent upon our elected representatives and community leaders to ensure that legalization of adult use marijuana is a transformative vehicle of economic empowerment for the black community.

January 24, 2021

Op-Ed: Locked Up and Locked Out: How to Ensure New York’s Black Communities Get Their Share of the Marijuana ‘Green Rush’

Cannabis, HBA in the News, Regina in the News

By Regina Smith – 1/10/2019

While Corvain Cooper sits in a prison cell in California facing a life sentence for marijuana-related charges, he is dealing with the reality that he may never be reunited with his family again or get a second chance at life outside of prison. Nearly 3,000 miles away in Atlanta, Robert Stovall was sentenced to 12 months in prison for possession of less than an ounce of marijuana and is in the same predicament. Stories like theirs have become a common narrative for many black folks across the country—especially in New York City.

Forty years ago, Eddie Ellis and a group of incarcerated men named The Think Tank at Green Haven Prison in New York issued the “Seven Neighborhoods Study,” which revealed that 85 percent of the state’s prison population was black or Latino and 75 percent came from seven NYC neighborhoods—Harlem, the Lower East Side, South/Central Bronx, Bedford Stuyvesant, Brownsville, East New York and South Jamaica.

Decades later, the alarming trend related to race, incarceration, marijuana and a racist criminal justice system still impacts our communities today. According to a report entitled “A Fair Approach to Marijuana” released by New York City Mayor Bill de Blasio, over the course of the first three months in 2018, 89 percent of nearly 4,000 individuals arrested for marijuana possession in the city were black or Latino. Furthermore, in the year 2017, black and Latino people accounted for 93 percent of marijuana convictions, 87 percent of marijuana arrests and 72 percent of marijuana summonses.

I have seen first-hand how the War on Drugs instituted by our former presidents and compounded by the extremely harsh Rockefeller drug laws has placed millions of African Americans behind bars. For over four decades, these policies have had devastating social and economic impacts on black communities across America, including my community of Harlem.

Fast forward in New York state: There is a current push to legalize adult-use (recreational) marijuana and expand access to medical cannabis in 2019. This creates incredible opportunities for aspiring entrepreneurs. The industry is slated to be worth $20 billion and create 300,000 jobs by 2020. In New York City alone, if cannabis were legalized, the state could gain up to $678 million in tax revenue.

To prepare our community, the Harlem Business Alliance launched “Green Revolution: Cannabis & Entrepreneurship,” a series of events to educate and empower the black community on the growing marijuana industry from both legal and economic standpoints. We are expanding our offerings in 2019. We bring in brilliant black minds from organizations like the Cannabis Cultural Association, Drug Policy Alliance, Cannaclusive, The New York Minority Alliance, Minority Cannabis Business Association and more.

As legislation moves closer to reality in the tristate area, there is an imperative need for immediate action. We must enlist the support of black leaders who have the power to shape truly equitable legislation consisting of strong equity provisions and reparative measures for black people.

We need legislation that only prioritizes licensing opportunities and resources for longtime residents from communities that have been disproportionally affected; where millions of state and city funds, as well as tax revenues, will be deposited in community reinvestment funds that promote economic empowerment in communities “most harmed” by the War on Drugs. The funding would provide startup capital, resources, incubators and on-going support to black cannabis entrepreneurs, so they have the means and opportunity to succeed in an industry that was built on their backs.

We need legislation that includes automatic and complete expungement of all marijuana-related convictions and protection from the continued victimization by big businesses that prey upon our community.

Furthermore, community-based organizations with deep roots in their neighborhoods and staff that is both culturally sensitive and competent to facilitate the growth of sustainable black businesses must be funded.

These measures cannot be lost under the umbrella discussions of diversity and intersectionality; this is about the black community. This list isn’t exhaustive, but it’s a starting point.

January 22, 2021

CNN: Harlem is fighting to save its remaining Black-owned businesses

COVID-19, HBA in the News

https://www.cnn.com/2020/09/01/business/harlem-black-businesses/index.html

By Chauncey Alcorn CNN Business

New York (CNN Business)Black-owned businesses in Harlem, the New York neighborhood synonymous with Black culture and history, were scarce even before the Covid-19 pandemic forced them to shutter indefinitely.

Now the area’s business leaders, who have been battling gentrification for years, fear the community may never be the same after the health and economic crises crushed the few Black businesses that remain.

“This could definitely be the Alamo for Harlem,” restaurateur and New York Hospitality Alliance President Melba Wilson told CNN Business over the weekend. Wilson, whose restaurant, Melba’s, opened in Harlem 16 years ago, has seen the number of Black-owned businesses in the neighborhood shrink over the years.

‘If the place goes dark, let me know’

Harlem restaurateur Melba Wilson stands in front of her namesake restaurant on July 23, 2020 in Harlem, New York.

Before the pandemic, Black people made up about 22% of New York City’s population, but only 2% of its 230,000 small business owners, according to the city’s Department of Small Business Services. The local economic development group Harlem Park to Park said its Black-owned membership dropped from 80% in 2011 to 65% in early 2020.

The group’s Executive Director Nikoa Evans, said the worst is still to come.

Coronavirus shutdowns have prevented business owners in Harlem and beyond from earning enough to pay their rent since March. A state moratorium on evictions is set to end on October 31. Evans said she’s heard from landlords who’ve been contacted by large corporations looking for bargains on commercial properties.

“Many of the big corporate chains are now contacting landlords and saying, ‘If the place goes dark, let me know,'” Evans told CNN Business on Monday. “It is absolutely a scenario not just in Harlem, but other ‘Harlems’ around the country.”

Evans expects the neighborhood’s “legacy brands,” like Sylvia’s soul food restaurant and the celebrity-owned Red Rooster, to survive the looming corporate bargain sale, but said most small businesses won’t be able to pay months of back-rent when the bill comes due.

The city recently unveiled its Black Entrepreneurs NYC program to help address the lack of Black-owned businesses. Big firms like Ernst & Young and Goldman Sachs have signed on to help aspiring Black entrepreneurs with free consulting and access to financing.

But for historically Black neighborhoods like Harlem, it may be too late to save businesses that were already struggling before the devastating punch of coronavirus.

‘It’s going to rain today, so I’m going to make zero dollars’

Alyah Horsford-Sidberry stands in front of her business, the Cove Lounge, in Harlem, New York, in this undated photo.

White transplants and a surge of immigrants to the neighborhood have fundamentally changed Harlem’s demographics over the past two decades. It’s been about 20 years since the neighborhood was majority Black, according to data from the NYU Furman Center. Residential and commercial real estate prices have shot up, often edging out Black entrepreneurs who struggle more than most to secure loans.

Wilson said the owners of several of the Black businesses she works with have given up on reopening.

“Many of them have turned in their keys to the landlords,” Wilson said. “Everybody’s worried about the history of these businesses, this community.”

Compounding the problem for restaurant owners: Indoor seating is still banned in the city, even as other parts of the state have been allowed to reopen at limited capacity.

Harlem leaders suggest the restaurant restrictions are having an outsize effect on Black businesses.

Nationally, Black entrepreneurs own a disproportionate amount of independent restaurants, which, in New York, have been limited to pickup, delivery, and outdoor seating during the pandemic. In June, Mayor Bill de Blasio extended the city’s “Open Restaurants” program, which grants approved eateries additional sidewalk, street and parking lot space to host outdoor seating.

But Alyah Horsford-Sidberry, owner of the Cove Lounge on Lenox Avenue in Harlem, said not being able to serve indoors has prevented her from paying rent.

“It’s going to rain today, so I’m going to make zero dollars,” Horsford-Sidberry told CNN Business. “If [Gov. Andrew Cuomo] doesn’t allow us to have some kind of indoor seating, that basically puts us out of business.”

Alvin Lee Smalls, owner of Lee Lee’s Baked Goods in Harlem, New York, shows off his famous rugelach pastries in this undated photo.

Alvin Lee Smalls, 78, owner of Lee Lee’s Baked Goods, has been selling rugelach pastries in central Harlem since 1988. He recently was chosen to receive a $10,000 grant from Beyoncé’s Black-owned small business fund and also secured a federal loan under the Paycheck Protection Program. (Smalls, like many others, was denied a PPP loan during the program’s rocky first round of funding.)

But he said the bulk of the profits he usually gets from walk-in customers have been absorbed by delivery apps like Grubhub. As a result, he also has struggled to pay rent. “We certainly are behind,” he told CNN Business.

During New York’s lockdown, the city signed lucrative contracts with companies outside Harlem to provide food and personal protective equipment, rather than hiring local businesses to do the work within their own community, says Regina Smith, executive director of the Harlem Business Alliance.

A lot of Black entrepreneurs were trying to get contracts to make face masks, Smith said. “We found businesses that were getting contracts and they weren’t even vetted. Black businesses are vetted all different kinds of ways.”

Jeff Lindor, an adviser for the city’s new Black entrepreneurship program, said communities like Harlem won’t be the same without current and future Black business owners.

“We need to make sure they stay viable, but also usher in the new generation of Black businesses,” he said.

September 9, 2020

Harlem World Magazine Op-Ed: From Black Wall Street To Today, It’s Time To Address The Systematic Devastation Of Black-Owned Businesses

HBA in the News, Regina in the News

By Regina Smith

Ninety-nine years ago this month, a murderous, racist mob looted and torched Black Wall Street, decimating Tulsa’s once-thriving African-American business district.
Known as “Little Africa,” the city’s Greenwood neighborhood was replete with its own banks, movie theaters, restaurants, hotels, clothing boutiques – and not to mention upscale homes.

This orgy of violence against black people began with what historians said was an innocuous interaction between a young white female elevator operator and a Black shoe shiner. But this was 1921, and a racially charged account of the incident that appeared in the Tulsa Tribune accusing the man of trying to rape the woman would prove deadly.

Historians have argued that the looters relished the opportunity to use the rape claims as a ruse to cut Greenwood’s Black people down to size; to upend generations of community prosperity and show the “uppity” Black business owners who were boss.

Shop the Harlem World Shop.

Official records put the death toll at 36, but recent estimates put the number of dead closer to 300, along with some 800 injured. More than 8,000 Greenwood residents were left homeless, and the 35 blocks that once made up Black Wall Street were left in charred ruin. The mob not only murdered with impunity, but the looting and burning of businesses meant that they killed Black livelihoods as well.

Tulsa’s Black community was forced to rebuild with no help from local, state or federal authorities. The area’s Black-owned business owners never again were able to reclaim their previous level of prominence.

This Juneteenth, we at the Black Business Empowerment Commission (BBECommission), a national organization focused on the economic health of the Black community, will launch an initiative to prevent another systematic decimation of Black businesses across America.

Due to a lack of access to capital, business networks, and public and private procurement opportunities, Black businesses were already in a vulnerable position before the coronavirus pandemic. The coronavirus pandemic on top of the American pandemic of racism has left Black businesses all across America in a state of crisis.

The story of Tulsa’s ‘Black Wall Street’ is well documented. The truth is there was a host of Black Wall Streets across America, and many met the same fate. The Hayti Community in Durham, NC, Jackson Ward in Richmond, VA, the Fourth Avenue District in Birmingham, AL, and Boley, OK are just a few.

We celebrate and remember all of our Black Wall Streets because when Black businesses thrive, the entire community is uplifted through job creation, a broader tax base and dollars being circulated within the neighborhood. And the next generation sees that entrepreneurship is a vehicle for Black economic empowerment and generational wealth. We are calling on federal, state and local governments to tangibly address the economic concerns of the Black community – something it has failed to do for more than 400 years.

At its core, our plan for Black economic empowerment includes sole-source public contracts administered by Black-operated and controlled entities with deep ties to the community. These sole-source contracts would enable Black businesses to engage in a substantive public and private sector contracts, access capital, culturally sensitive and competent technical assistance, back-office support, and workforce development.

Most importantly, sole-source contracts will allow the Black community to exercise “PHD”- the purchasing, hiring and depositing of the Black dollar within a Black-owned and operated economic ecosystem.

In the wake of George Floyd’s tragic death in police custody and the protests and unrest that have followed, the Black community does not have the luxury of fighting for social justice while ignoring economic justice for Black people.

Let’s be clear: we cannot talk in general terms about diversity and inclusion, minorities, and people of color because it mostly benefits white women and others. Black does not equal small businesses. Black does not equal diversity. Black does not an equal minority. Black equals Black, and we urge the government at all levels to partner with us to remedy centuries of economic devastation in the Black community!

Regina Smith is the executive director of the Harlem Business Alliance, an organization dedicated to enriching the local business community, with an emphasis on Black-owned businesses through education, support and advocacy. She is a founding member of the Black Business Empowerment Commission (BBECommission.org), a national coalition of business owners advocating for economic equity for Black-owned businesses in both the public and private sectors.

https://www.harlemworldmagazine.com/op-ed-from-black-wall-street-to-today-its-time-to-address-the-systematic-devastation-of-black-owned-businesses/

June 26, 2020

CNN: The Black Lives Matter movement is driving customers to Black-owned businesses. Owners worry it won’t last.

Economic, HBA in the News, Politics

By Fredreka Schouten, CNN

Sales at designer Roslyn Karamoko’s upscale boutique on Detroit’s main business thoroughfare already had started to slow before Covid-19 hit and shut down Michigan’s economy.
In mid-March, she shuttered her store, Détroit is the New Black, and sent home her five employees, believing she might never reopen.

“Then, came Black Lives Matter,” she said, and a rush of sales as customers raced to support Black businesses following the coast-to-coast uprising over the death of an unarmed Black man, George Floyd, under the knee of a Minneapolis police officer.
Karamoko’s online business quickly tripled.

The national reckoning on race triggered by Floyd’s death — and Covid-19’s disproportionate toll on people of color — has brought fresh attention and new business to Black companies and causes. Major corporate brands have signaled their support for the Black Lives Matter movement. Ice cream maker Ben & Jerry’s called for Americans to “dismantle white supremacy.” Bank of America has pledged $1 billion over four years to address racial and economic inequality. Quaker Oats decided to retire its 131-year-old Aunt Jemima brand. NASCAR banned the Confederate flag from its events and properties.
On a smaller scale, social-media influencers have turned over their Instagram accounts to Black business owners. Google sheets of restaurants and shops owned by African Americans abound online.
“We’re in the middle of a strong watershed moment,” said Americus Reed, a marketing professor at the University of Pennsylvania’s Wharton School. “It seems like everyone is unambiguously saying, ‘Here’s where I stand. Here’s where my company stands. Here’s my plan to support the Black community and Black Lives Matter and social justice.’ ”

But for small, Black-owned businesses — already hard-hit by the pandemic — this new world poses challenges of its own. And some fear any business gains from this moment of public soul-searching over racism could prove ephemeral if the country — and customers — move on.

Sustainable business model?

Many black-owned small businesses are especially vulnerable now due to the effects of the pandemic, recession and vandalism.

Many black-owned small businesses are especially vulnerable now due to the effects of the pandemic, recession and vandalism

While Karamoko is grateful for the new interest, she no longer has employees to help her fill orders and juggle customer-service questions. In addition, the social-distancing requirements imposed by the pandemic have slowed production at the printing companies that help produce her trademark “Détroit is the New Black” t-shirts and totes.

“Logistically it’s kind of a mess,” she said. “I’m overwhelmed. I don’t mean to sound like it (the increased business) is a bad thing. But it highlights the fragility of a lot of our businesses.”

And Karamoko and other business owners say they also worry about misjudging this moment and expanding too quickly. “Where is the line between white guilt and building a sustainable business model?” she asked. “Can you accurately project your business based on this surge?”

At Mahogany Books, a Black-owned bookstore in the nation’s capital, business is booming with online orders for titles such as “How to be an Antiracist” by historian Ibram X. Kendi and “Between the World and Me” by journalist Ta-Nehisi Coates.

(The store’s recent online event with Kendi reading from his new board book for young children, “Antiracist Baby,” drew participants from Brooklyn to Boise, Idaho, and dozens of questions about how to talk to children about racism.)

Co-owner Derrick Young plans to roughly triple his normal staff to meet the growing demand but says the staff build-up may be temporary

“That’s definitely a question for us: How to scale up without over-extending ourselves?

Black business ownership

Of the 5.7 million US firms with paid employees, about 124,000 — or a little more than 2% — were Black-owned in 2017, according to a Brookings Institution analysis of the Census Bureau’s most recent survey of US businesses.

Some of the largest sectors for Black-owned companies — health care and retail — also have been among the hardest hit by the pandemic. And Black-owned businesses have had a harder time receiving federal Covid-19 relief, including the Paycheck Protection Program. The program, intended to help struggling small firms retain and rehire employees, makes forgivable loans through banks to small business owners.

“Some people just weren’t able to qualify,” said Regina Smith, executive director of the Harlem Business Alliance in New York City. “The big banks were going to cater to their clients, and we don’t have those kinds of relationships. It’s been a mess all the way around.”

Black businesses, Smith said, need specific policies to ensure their long-term survival and growth. In Harlem, where gentrification has sent rents soaring, she wants developers of residential buildings to set aside ground-floor commercial space for businesses owned by African Americans.

“It’s important that our youth see Black-owned businesses in the communities where they live,” she said. “We’re not going to have social justice in this country, if we don’t have economic justice.”

Across the country in Austin, Texas, jewelry designer Sheila Hawkins-Bucklew said she didn’t qualify for any Covid-19 federal aid. And because she has not fallen behind on rent for her shuttered storefront, she also doesn’t qualify for assistance from a local program established to help people in the city’s “creative” sector with rent payments.

Hawkins-Bucklew did see a surge in online interest in her jewelry-design business in early June after local news reports and another business owner highlighted her firm among the city’s Black-owned companies.

“My sales increased 200% for that first week,” she said. “But it’s like crickets now.”

“It’s wonderful that people want to do something and that awareness has been brought to the fact that we have businesses that we want to scale up,” Hawkins-Bucklew said. “But it can’t just be a one-time thing because something awful happened and people realized, ‘Yes, racism is still alive and well.’ ”

https://www.cnn.com/2020/06/20/politics/black-owned-businesses/index.html

June 20, 2020

Bloomberg: PPP Isn’t Enough for Black-Owned Businesses

COVID-19, Economic, HBA in the News

Federal small-business aid, even if it gets through, is not a long-term solution to what ails low-income communities of color.

By Timothy L. O’Brien

During Senate testimony on May 19, Treasury Secretary Steven Mnuchin assured legislators he had been transparent about how he was spending taxpayer dollars to support small businesses struggling to survive the coronavirus pandemic — despite controversies that the well connected were often first in line for funding. Last Wednesday, Mnuchin returned to the Senate and reversed himself. He said he had decided not to release the names of recipients of Paycheck Protection Program money or how much they’ve received.

At the same hearing last week, Jovita Carranza, the director of the Small Business Administration, said that 45% of PPP funds went to businesses in “low-income areas.” It’s not clear how Carranza is defining “low-income areas” or whether what she said is even true because, again, she and Mnuchin aren’t disclosing enough public information to gauge their programs’ effectiveness.

Early last month, the SBA’s inspector general released a report noting that of $659 billion that Congress has approved for PPP loans — which are meant to allow small businesses to keep workers on their payrolls instead of firing or furloughing them — about $425.8 billion had been disbursed. The inspector general pointed out that the legislation authorizing PPP funding mandated that the SBA prioritize lending to rural, minority and women-owned businesses, but — surprise, surprise — that didn’t appear to have happened.

Why not? Because the SBA decided not to order private banks charged with disbursing the money to do so, according to the inspector general. And, his report noted, “because SBA did not require demographic data to identify PPP borrowers in underserved markets, it is unlikely that SBA will be able to determine the loan volume to the intended prioritized markets.”

Denise Ford Sawadogo, an African-American entrepreneur who founded the Montclair Brewery with her husband, Leo Sawadogo, in Montclair, N.J., almost two years ago knows what it’s like to be in an “intended prioritized market” — and to be passed over. She applied for PPP funds during the first round of loans approved on March 27 and didn’t receive any. “All those big connected companies got it,” she told me. She managed to snare funds in the second round approved on April 24, and it’s helped her retain the four part-time and one full-time workers she and her husband employ. Without PPP, it would have been a “real struggle” to keep her doors open, she said.

Ford Sawadogo said her local government’s red tape has made it hard for her to maneuver through the crisis. Town planning rules have slowed down her ability to serve people on the sidewalk and other areas outside her small brewery, for example. “I was like, ‘Guys don’t you know this is Covid-19 and we’ve been stripped bare,’” she said. “They act like it’s business as usual.”

But, she allowed, “we have beer, and everyone loves beer.” She also pointed out that her master’s degree in business made her comfortable navigating the PPP application process, an advantage many of her counterparts don’t enjoy. She also has employees. “Most black-owned small businesses don’t have payroll,” she said. The PPP requires businesses to have employees, so sole proprietorships such as black-owned beauty salons were shut out. Ford Sawadogo is also operating in an affluent suburb. Across the Hudson River in New York, the challenges are even greater for black-owned businesses in low-income neighborhoods.

“There definitely have been black-owned businesses that have difficulty getting PPP money because they lack the qualifications,” said Regina Smith, executive director of the Harlem Business Alliance, an advisory organization for local African-American entrepreneurs. “They either don’t have enough employees or often don’t have relationships with banks.”

The White House and Treasury Department were broadly criticized for not making funds more accessible to small businesses owned by people of color after the first PPP round ran dry, and they convened meetings to try to avoid the same problems after the second round was approved. The government relaxed some of the requirements for how the funds could be used and made other adjustments so more businesses could qualify. PPP funding was also channeled to more nonbank financial institutions in communities of color. It had an effect.

Pat Stevenson, a former advertising executive, has been running a group of community newspapers in Harlem, Brooklyn, Queens and the Bronx through a holding company, Harlem Community Newspapers Inc., for 25 years. She also conducts networking events and publishes a newsletter for African-American women who are entrepreneurs. She said a number of black-owned businesses that she advised were able to get PPP funding during the second round after coming up empty the first time.

A large swath of her neighborhood businesses was still ineligible for PPP, however. “There are a lot of people in our community like me. Restaurant owners and beauty shop owners who don’t have payroll,” she said. “There are more than 100 of them. But they have rent and they have other overhead costs and they can’t get PPP.”

Black-owned small businesses have also been more heavily ravaged by the pandemic. A recent report by the National Bureau of Economic Research found that the total number of black-owned businesses in the U.S. fell 41%, from 1.1 million in February to 640,000 in April, because of fallout from the coronavirus. The report, which relied on census data, said that about 22% of all small businesses nationally closed during that period. (Small-business closings in the Latino, Asian, and female-owned small business community were about 32%, 36% and 25%, respectively, according to the NBER.)

This exacerbated problems that already existed for black entrepreneurs. According to the Center for Responsible Lending, a nonprofit advocacy group, about 46% of white-owned businesses were able to get credit from a bank over the last five years — compared with just 23% for black-owned businesses. “We have some businesses that have been open for decades and can’t get revolving lines of credit,” said Smith, of the Harlem Business Alliance. “It’s very systemic, and it holds our businesses back.”

All of this raises a broader truth about PPP: It’s not a long-term solution to what ails low-income communities of color (or, for that matter, low-income rural communities that are predominantly white).

To be sure, the national protests following the death of George Floyd at the hands of a white police officer in Minneapolis has laid bare how severely — and uniquely — racism and abusive, oppressive policing have held back communities of color for generations. But for real, long-term change to arrive, which the coronavirus pandemic and the Floyd protests have also revealed, neighborhoods in need will also require better housing, health care, transportation, education and jobs. And that will demand sustained funding that doesn’t take the shape of emergency stopgaps like PPP.

“We know for a fact that that concentrated poverty and concentrated institutional decline have a profound impact on a person’s life outcomes. We have to talk about community revitalization and economic growth,” said John Lettieri, the president and chief executive of the Economic Innovation Group, a bipartisan research group that focuses on entrepreneurship and economic development. “The scale of the resources we’ve brought to this battle have been significantly less than the size of the problem.”

A pair of research reports EIG recently published are well worth reading. Relying on granular, community-based data going back decades, the reports detail the extent to which “persistent geographic inequality defined the record-long economic expansion that has just come to an end.” The reports give context and texture to the disturbing growth of high-poverty metropolitan neighborhoods between 1980 and 2018, and illustrate how those same entrenched neighborhoods have become barriers to economic development and personal liberation within major cities.

Persistent poverty, the reports note, highlights the need for “place-focused targeting” as policy makers continue to support small and new businesses while shielding communities from continued economic hardship. Continuing to ignore metropolitan neighborhoods that didn’t benefit from decades of economic growth in the U.S. “in the current downturn and through the next recovery would be public policy malpractice,” the reports observe.

This has already surfaced in the data. While the White House helped lead a round of huzzahs that greeted improved jobs numbers in May — a bump that was most likely due in part to the benefits of PPP funding that went predominantly to white-owned businesses — it managed to ignore the fact that the jobs landscape had actually worsened for black workers in the same period. It would help matters if Mnuchin and others overseeing future aid bear the black community, and transparency, in mind as policy discussions continue. If they don’t, they shouldn’t expect the anger and resentment currently fueling mass protests across the country to simply evaporate.

Regina Smith, and her neighbors in Harlem, concur.

“We really need black-owned institutions to work with black businesses if this is going to be meaningful,” she said. “I’m sick of having these conversations about inclusion. How many blacks are working for tech companies? You can’t have social justice if you don’t have economic justice.”

https://www.bloomberg.com/opinion/articles/2020-06-15/coronavirus-ppp-isn-t-enough-for-black-owned-businesses

June 15, 2020

Bloomberg: PPP Isn’t Enough for Black-Owned Businesses

COVID-19, Entrepreneurship, HBA in the News

https://www.bloomberg.com/opinion/articles/2020-06-15/coronavirus-ppp-isn-t-enough-for-black-owned-businesses

Timothy L. O’Brien is a senior columnist for Bloomberg Opinion.

Federal small-business aid, even if it gets through, is not a long-term solution to what ails low-income communities of color.

Many small businesses in neighborhoods like Harlem were ineligible for assistance. Photographer: Dia Dipasupil/Getty Images