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PPP loans challenging to secure for some minority-business owners, Florida data may suggest

Generation of entrepreneurs could be lost, fears FSMSD council president
Posted at 9:11 AM, Aug 17, 2020
and last updated 2020-08-17 09:11:38-04

About 400,000 — that's how many Florida businesses received federal Paycheck Protection Program loans to survive the pandemic.

Officials estimate the more than $32 billion saved 3.2 million jobs. But when it comes to minority-owned businesses, the state's data suggest there is disparity.

When the pandemic hit the economy, Larry Thelmas was one of many Florida business owners whose operations froze.

"It halted sales for about eight weeks," Thelmas said.

He said securing a federal PPP loan was vital to keep the lights on at his lighting business, Florida Clear Energy.

"I was going into my personal checking, personal savings to maintain the office and maintain my payroll," he said.

While Thelmas, who is Black, said he didn't struggle much to secure the aid, he was sure many of his minority colleagues had different experiences.

Getting a clear picture isn't easy.

The Small Business Administration's PPP application didn't require business owners to provide race. However, looking at the numbers available does suggest inequity.

Beatrice Louissaint
Beatrice Louissaint, the head of Florida State Minority Supplier Development Council, believes a disparity for PPP loans for Black-owned businesses exists because they often lack the stronger banking relationships of white owners.

Of the more than 22,000 recipients who volunteered their race, the vast majority were White -- about 67 percent. Only about 4 percent of the recipients were Black. Hispanics and Asians fall between the two -- 22 percent and 7 percent, respectively.

The SBA maintained minority totals are much higher due to spotty info, but it lacks the data to back that.

"Black businesses did not get PPP, particularly early on," said Beatrice Louissaint, head of Florida State Minority Supplier Development Council.

Louissaint's group helps encourage the growth of minority-owned businesses across Florida. She believed a disparity for Blacks, in particular, exists because owners often lack the stronger banking relationships of White owners.

"With COVID— much of what we're doing moved online," said Louissaint. "If you didn't have the documentation or information or relationship with your banker, it made it even more challenging."

Add to that a study from the National Community Reinvestment Coalition. It found 43 percent of the time, banks treated Black PPP borrowers significantly worse and offered different products when compared to white borrowers with slightly weaker financial information.

"We're going to lose an entire generation of entrepreneurs because they couldn't get the help they needed immediately," Louissaint said.

With another stimulus plan in the works, Louissaint was hopeful the federal government would improve things. She wanted a more streamlined application process and reduced thresholds for loan forgiveness.

Thelmas, who said lenders have denied his loan applications in the past, encouraged minority-owners who missed out on PPP during the last round to keep trying.

"It has been challenging, being who I am and being a small business owner," Thelmas said. "You keep going, and if you can't do it on your own — you get help. "