A recent NBC News article sheds light on the financial hardships impacting Latino and minority-owned businesses in the US. And the new Coronavirus package approved by Congress does very little to help.
According to the news report, many businesses owned by Latinos or other minorities and women secure loans through community lenders, commonly known as CDFIs or Minority Depository Institutions. These institutions are certified by the Department of the Treasury to provide capital to underserved communities, minorities, and people considered “underbanked”.
But despite the vital role these lenders play and the fact that Latino small businesses are driving U.S. small-business growth, the latest coronavirus bill failed to give such lenders a fair shot at the next round of loan money from the federal government.
The $484 billion relief package passed by Congress Thursday (April 23) sets aside $30 billion for community lenders, but they must “share” that pie with small banks with assets of $10 billion or less. While that sounds promising, the reality is far from optimistic. This “small banks” category includes 95 percent of the nation’s traditional banks, the ones who typically don’t lend to Latino and minority businesses.
For a number of Latino and other minority business owners, explains the NBC report, traditional banks have never been an option for loans. A greater share of Latino business owners are unable to get financing compared to non-Latino, white-owned businesses, much like African American business owners, according to the Stanford Institute for Economic Policy Research.
A survey of more than 500 Latino small business owners, conducted by LULAC and the Hispanic Chamber of Commerce, showed just 97 of respondents (less than 20 percent) who applied for loans got any money in the first round of funding.
This is why LULAC and other organizations are fighting to set specific guidelines on the distribution of the CORONAVIRUS package and to get Washington to protect Latino and minority-owned businesses.