Federal loan programs were supposed to be a lifeline for small-businesses, but not all have received aid. For minority business owners, it only makes the road to full recovery steeper.
In March, Young Mountain Tea was going through a growth phase, says founder Raj Vable. The Springfield-based distributor had increased sales and had recently hired a new team member.
“Then COVID broke out and everything has either gone sideways or otherwise,” Vable says.
With local shops closing, clients stopped buying tea, which Vable sources from Nepal and India. He applied for the federal Paycheck Protection Program (PPP) loan.
As part of the CARES Act, $349 million in PPP loans were set aside for small businesses to help pay up to 8 weeks of payroll costs including benefits. But Vable has yet to hear back, likely because funds were exhausted within two-weeks after going live.
“It’s like being strung along...being tempted by a lifeline and being surrounded by a chaotic environment where everyone’s grabbing for [funds], and then feeling like it’s getting pulled away," he says.
As a first-generation Indian business owner, Vable says minorities don’t have as big of a safety net as others.
“The ability to access other forms of capital through friends and family, that’s not an option for us. The availability of these funds really is the difference between surviving, or going under,” he says.
Vable says he’s cautious about relying on aid now, but he’s hoping Oregon and the federal government will step up before the window for recovery closes.
“Small businesses are the backbone of the country, almost 90% of jobs are created by small businesses, and if we want to talk about being a prosperous economy we have to save our small businesses,” he says.
For now, Vable says Young Mountain Tea has been able to stay afloat by pivoting to online sales. But, the business was dealt another blow by COVID-19. It disrupted his supply chain. Vable estimates the company has about a month left before their situation worsens.
On Monday, a coalition including the Asian Pacific American Chamber of Commerce, the Black American Chamber of Commerce, the Hispanic Metropolitan Chamber of Commerce, the Oregon Native American Chamber, and the Philippine American Chamber of Commerce sent Governor Kate Brown a letter asking to prioritize funding for people of color-owned businesses.
”Unless the State of Oregon directs a significant portion of the $2.45 billion in federal aid immediately to our businesses, we foresee the near total decimation of the POC-owned small business community across Oregon,” the letter stated.
The letter has several asks including the recognition of the historical racism toward marginalized groups in the state, $10 million in direct financial assistance to businesses owners of color, and $5 million in technical support for vulnerable groups.
The letter concluded with the the following: ”To ensure Oregon’s POC-owned small businesses can once again open their doors, remain open in the long term, and provide critical employment and services, we urge you and the Oregon Legislature to act now and invest significant resources in direct financial relief and technical assistance. Every day we wait results in more job loss and the boarding up of storefronts in our communities, potentially forever." The full letter can be viewed here.
Meanwhile, Democratic U.S. Senator Ron Wyden joined 22 congressional senators in sending a letterdirected toward the Trump Administration last week. It demanded the Small Business Administration (SBA) and the Treasury Department prioritize minority owned businesses.
“As we work to secure additional funding for the survival of small businesses across the country, it is crucial that we can verify the accessibility of federal assistance to all eligible companies,” the letter from the senators stated.
Specifically, the letter called on the Trump Administration to ensure lending institutions comply with fair lending laws and that they report on the demographics of all PPP disbursements. The senators wrote that without reporting there’s no way to confirm or correct the possible exclusion of minorities from federal assistance.
“The story of minority-owned businesses struggling to access capital is the story of banking practices that too often exclude people of color as potential customers,” the letter stated. "A federally guaranteed loan program must not do the same."
While PPP funds have been exhausted, small businesses may have another shot at relief, according to The Hill. The U.S. Senate passed a bill that includes an increase of more than $300 million for the Paycheck Protection Program on Tuesday. Whether this next possible round of funding makes it to minority business owners though, remains unknown for now.
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