Businesses can begin applying for another round of Paycheck Protection Program loans this week. Only a small fraction of Black-owned businesses have received loans as part of the CARES Act.
The rules guiding this round of PPP loans have been tweaked to make them more accessible. Shanté Williams represents many Black business owners as chair of the Charlotte Mecklenburg Black Chamber of Commerce, and she joins WFAE "Morning Edition" co-host Lisa Worf with more details.
Lisa Worf: So, in that first round of PPP loans, what did you see with the Black business owners you work with trying to get those loans?
Shanté Williams: I saw a lot of frustration. A lot of people were not prepared for the bank, to come into larger banks with the documents required. They may not have even been able to gather all the documents. And so the process was unclear. It was muddied. And frankly, because the businesses were smaller, they weren't able to break through the crowd, honestly, and so they ended up being last in line or denied. So, a lot of people became very frustrated. The process just wasn't clear, and there was no path to the money, really, for them.
Worf: Going into the second round, how are you advising your members, then?
Williams: Well, ever since that first round, we had started telling all of our businesses, "You really need to get your financial books in order," because we had heard murmurings that there might be some second rounds or some loans that are coming from other sources. So, we wanted our businesses to be better prepared. So, coming into the second round, a lot of our businesses had met with accountants, a lot of organizations worked with us and other organizations to help get that financial expertise to those businesses and help to get them ready to apply to any type of loan — federal or otherwise.
So, coming into this round, we're hoping that they're much more prepared with their own documentation. Now, really, the onus and responsibility is going to be much heavier on the banks, so our members have opened bank accounts in banks that are more community-focused, that work with smaller businesses on a more granular level. And they worked to build those relationships over the last six or seven months, so we're hoping that they are really first in line, ready to go.
Worf: And those are some of the banks that this new round gives priority to, right?
Williams: Yes. Banks like M&F Bank, which is a Black-owned bank. They actually were one of the banks that were successful at getting some Black business owners lending in the first round, but now that they got that priority and they got a few early days of lending, we are really hoping that the business owners that started accounts there are able to get through the process.
But I definitely liked the change because hopefully, Black business banks are able to capture some of that funding even for being the servicer of the bank. And that's ultimately going to make the community stronger with the banking relationship between Black business owners and banks.
Worf: After your members' experience with the first round of PPP loans, are many planning to try this time around?
Williams: You know, the first time the phone was ringing so much that our servers crashed — our website servers crashed. We were seeing thousands of people try to get in per day, ask their questions: What do I need? How do I get in line? This time around, I've not gotten a single inquiry. None. I would not be surprised if a lot of business owners just decided to skip this round of PPP and don't want to take on the debt and really forego any of the headache and hassle.
Worf: And so part of your advising of business owners, is it partly to say, "Hey, maybe you should consider this?"
Williams: Absolutely. You know, our businesses are already undercapitalized, so if there is capital that you can bring into your company, using it smart and deploying it in a wise way, we are encouraging them to pull it on, especially if the loan is forgivable because that ultimately could set them up for longer-term success.
Worf: As far as those Black-owned businesses that are surviving, what's that looking like? I mean, how many of them are staying afloat at this point?
Williams: Well, we are happy to say that while early on in the pandemic we were seeing closure rates of 50 to 60%, probably about half of those have now opened back up. So, we still have some businesses that have permanently closed. Anecdotally, within our membership, we have about a 38% closure rate for our businesses that look like they're going to be permanently closed, at least in this version of their life cycle. Now, other businesses have been able to either reopen or reopen with some tweaks to their revenue model...
Unfortunately, Black businesses are really used to operating in a bit of survival mode, and so COVID is just kind of the ultimate survival mode for them, and they have been able to continue to operate, maybe not optimally. And we're trying to move our businesses out of that survival mode into the thriving mode where they are starting to grow and they're starting to add employees so the next economic downturn, they're better prepared.
Shanté Williams is a member of WFAE's Community Advisory Board.
