Changes to Relief Program Trip Up Small Businesses Seeking Loans

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There's a big question looming over the paycheck protection program that the federal government set up that aid money is not reaching business owners of color why not and here's Danielle Kurtzleben looked into it the first time Rosemary Bolger applied for the small business relief loans it didn't go well she needed a loan for naco creative her small Minneapolis based company which has created ad campaigns for brands like the NCAA final four so she went to her credit union they were hard to reach but eventually I got through to someone and they emailed me back saying the current process for them because they don't process SBA loan I wasn't aware of that then after trying and failing it to other banks she managed to find one that was accepting applications for new customers and she quickly applied but then next week I got an email from them saying you know the money is running out and then now it's just going to prioritize their clients that had borrowed before the budget has applied there again during the second round of funding but hasn't heard back yet but she could use the money and fast her team is currently working through the pandemic without pay we will have a healthy pipeline coming into this year as soon as this came down everything went on hold and then disappear lawmakers set aside thirty billion dollars for smaller lenders with an aim of helping business owners of color like Bhoja but a new report from the small business administration's inspector general found that minority owned businesses may not have received loans as intended because the agency didn't tell lenders to prioritize those borrowers the carers act ten rules specifically laying this out the report also recommended that the agency collects demographic information going forward an additional problem for these owners is that they are more likely to be sole proprietors in other words their businesses are owned by one person according to Ashley Harrington senior policy counsel at the center for responsible lending what we're talking about getting rid of color most of them are very small businesses so their sole proprietorship or they have less than ten employees who are likely to be a sole proprietorship than any of the other small businesses the budget has six people on her team and they're all contractors making her business one of those one person's sole proprietorships some of those were only allowed to apply for PPP funds one week after other businesses that put them in the back of the line to get the money which ran out quickly during the first round in addition relationships with banks matter according to Michael Roth he's managing partner at next street which works with local governments on small business policy black and Hispanic owned businesses because of their lack of access to capital and banks and financial institutions and friends and family are far more likely to use personal funds to finance their businesses and generally that's run out of you know personal checking accounts that could be a problem for some businesses in the program because some banks would only loan to people with business accounts so owners without those were shut out boy just says that if she doesn't get the funding it won't take her business down completely but it could make life harder the main thing that we're on the verge of losing in their office space but yeah we will go out of business but it's it's already hurt the contractors who rely on her for income one of my team members and taken a job with Amazon for example but but we're still pushing to get business in for now she says they're working on a new project to make sure health information about corona virus can reach poor and immigrant communities as well as communities of color Danielle Kurtzleben NPR

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