Of the 1,300 Paycheck Protection Program loans that Southern Bancorp made last year, many went to customers who had been declined by larger banks, Williams said.
In a recent Federal Reserve survey, nearly 80 percent of small business owners of Black or Asian descent said their businesses were in poor financial shape, compared with 54 percent of white entrepreneurs. And black owners face unique challenges. While owners across the Fed said their main problem right now was low customer demand, black respondents cited another major challenge: access to credit.
When Jenell Ross, who runs a car dealership in Ohio, applied for a loan for the Paycheck Protection Program, her longtime bank urged her to look elsewhere – news that big banks like Bank of America, Citi, JP Morgan Chase and Wells did Fargo to many of them referred customers in the frantic beginnings of the program.
Days later, she got a loan from Huntington Bank, a regional lender, but the experience stung.
“In the past, access to capital has been the primary concern of women and minority-owned companies to survive, and it was no different during this pandemic,” Ms. Ross, the black, told a House committee last year.
Community groups join
Community lenders and charities took a shoe leather approach to fill the gaps.
Last year, the American Business Immigration Coalition, an advocacy group, worked with local nonprofits to develop a “Community Navigator” program that outreaches to black, minority and rural businesses in Florida, Illinois, South Carolina and Texas were posted. They plowed through Whac-a-Mole style roadblocks.
Language barriers were widespread. Many entrepreneurs had never applied for a bank loan before. Some didn’t have an email address and needed help creating one. Some hadn’t filed taxes; The coalition hired two accountants to help people manage their finances.
“Our people literally went door-to-door and guided people through the process,” said Rebecca Shi, the group’s executive director. “It’s time consuming.”