August 27, 2020
Los Angeles’ Broadway Federal Bank and Washington, D.C.'s City First Bank are merging to form the largest Black-led bank in the U.S., underscoring the challenges such banks have faced in generating enough capital to effectively serve their communities
BY NIV ELIS - 05/18/20 06:18 PM EDT
It takes a lot to turn an idea into a small business: A storefront or some office space. Equipment, inventory, personnel, not to mention marketing, permitting, and insurance.
All that costs money. Without funding, those businesses can’t launch or else quickly fail. And without cash to smooth over rough patches, a single emergency can destroy a company. That’s why it can be so devastating to be turned down for a business loan — which disproportionately happens to Black-owned businesses.
MARCH 30, 2020
NAACP President Derrick Johnson believes the federal government is almost refusing to help them during the pandemic.
“Over the last 10 years, the fastest growing community to create new businesses was actually African Americans. However, the response in the stimulus packages that have been passed to date has created a vacuum for those same businesses because banks have been given the latitude to cherry pick their larger customers over smaller businesses, which African Americans make up a significant portion,” Johnson told BET.com in an April 28 interview.
Johnson was referring to provisions in the CARES Act that made the first round of funding ($349 billion) in the Small Business Administration’s Payroll Protection Program accessible only through banks and other existing SBA lenders. According to the Center for Responsible Lending, on this basis approximately 95 percent of African American-owned businesses had almost no chance of receiving a PPP loan through a mainstream bank or credit union.