As major PPP changes begin, advocates demand fair solutions – Los Angeles Sentinel | Los Angeles Sentry
$ 10 billion requested for direct housing assistance payments
Over the past year, COVID-19 and its variants have plagued the world, claiming lives and disrupting normal activities in virtually every area of life. For black America, already plagued by sharp disparities in health, income and wealth, dealing with the pandemic has been even more painful.
With less income, higher unemployment and reduced access to financial resources, businesses and consumers are struggling to keep the help they badly need. In many cases, modest financial resources are exhausted or nearly exhausted, and the patience to cope has dwindled.
In response, an unprecedented coalition More than 100 national, state and local advocates are lobbying Congress and the Biden administration for substantial changes to provide fair relief to underserved communities. The main concern of the coalition was to secure Paycheck Protection Program (P3) funds for deserving companies, but largely excluded from previous funding rounds.
“The design of PPPs has severely disadvantaged businesses owned by people of color, which typically do not have an established bank and face greater barriers in accessing capital,” the coalition wrote. “Additionally, the incentive for lenders to fund large loans, which generated higher fees, has proven to be a barrier to entry for the vast majority of businesses of color.”
Fortunately, starting February 24, new PPP approvals will be limited to companies with 20 or fewer employees for two weeks to target small businesses with relief. The SBA will also be implementing new rules in the coming days that will lower barriers for small businesses in several areas. These key changes will provide better access and equitable aid: using gross income instead of net profit as an eligibility measure, improving demographic data collection practices, and eliminating student defaults / delinquency of candidate borrowers.
However, despite these changes, more needs to be done to help businesses that were already underserved by P3s. “Many black, Latino, Asian and immigrant business owners are sole proprietors and independent entrepreneurs – essential to their communities,” said Ashley Harrington, director of federal advocacy at the Center for Responsible Lending (CRL). “Congress should retroactively make eligibility for the increased loan amount for sole proprietors and independent contractors, as it did when the rule changed for small farmers and ranchers. We must ensure that all vulnerable businesses have equitable access to the relief they need to overcome this crisis. “
Well-known national organizations such as the NAACP, the National Action Network, and the National Fair Housing Alliance are partnering with black business organizations such as US Black Chambers, Inc. and the United States Hispanic Chamber of Commerce, as well as local partners, including Boston Impact. Initiative, Chicago Urban League and Pacific Community Ventures.
Speaking with one voice to federal officials, this coalition organizations and businesses called directly on February 12 for explicit racial solutions to the new relief from P3s. Supporting this appeal, data has shown that these same companies that previously lacked P3 funding collectively provide 8.7 million jobs, $ 280 billion in annual payrolls, and $ 1.3 trillion in revenue.
“This targeted aid should serve as a model for a long-term revitalization program aimed at providing small businesses in these hard-hit areas with the resources to recover faster and come out strong,” said Luc Pardue, and economist at Gusto, a national data company specializing in small businesses. The cabinet is also a member of the coalition. “Such a plan could take the form of targeted block grants that Congress gives to struggling localities, which are then able to spend the funds on small business development, skills training and support programs to improve retention. employment. Congress could make the Neighborhood Capital Investment program permanent with $ 12 billion in annual appropriations. »In its own independent PPP analysis, Certificate revocation list also noted the profound effect of the pandemic on small businesses.
“At the start of the program and during the first round of funding from April 3 to April 16, 2020, it was clear that structural inequalities were built into the administration of the program, the application process and the fee structure,” says one. CRL guidance note. “These structural inequalities have made it extremely difficult for small businesses – and especially businesses owned by people of color – to qualify for or receive aid in time to save their businesses and the jobs of the employees who depend on it. “
Additionally, and according to CRL, the administration of PPPs by the Small Business Association did not require demographics to determine whether lenders were prioritizing underserved markets and businesses and, therefore, did not indicate the lender to prioritize borrowers in underserved markets.
Just as black businesses struggle to access capital, exclusionary housing policies have made it nearly impossible for black families to build home equity on par with whites and / or convert equity from home. their home in wealth needed to start a business. In short, denial of access to finance is one of the main reasons many black consumers struggle as tenants instead of homeowners.
Representing the country’s largest trade association with its 1.4 million members working in residential and commercial real estate, the National Association of Real Estate Agents recently published a report analyzing data from the American Consumer Survey of the Census Bureau. From a racial standpoint, NAR has looked at homeownership over the past decade, looking at the characteristics of homebuyers, their reasons, and their financial situation.
Noting that homeownership increases the wealth of consumers, NAR concluded that the net worth of a landlord is 40 times that of a tenant: $ 255,000 compared to $ 6,300 in 2019. But, according to NAR , not all families have the same access to property, and property itself does. not offer a full perspective.
White consumers have historically had a homeownership rate of 70% or more. But over the past decade, homeownership among blacks, the one group most affected by the Great Recession, has fallen from 2009 to 2019 to 42%, less than that of Latinos at 48%, or Asians. -Americans at nearly 61%. Depending on location, white ownership ranged from 49% to 78%, black ownership ranged from a low of 5% in North Dakota to 70% in Puerto Rico. In the continental United States, the largest black homeowners in 2019 were in South Carolina and Maryland, both at 52%.
Explain racial disparities, Laurent YunNAR Chief Economist said: “The strong performance of the residential housing market during the pandemic has helped homeowners enjoy a significant increase in their wealth via approximately $ 1 trillion in additional equity over the course of the pandemic. of the last year. However, as an indicator of the K-shaped economic recovery, more potential first-time buyers – many of whom are minorities – feel discouraged by disproportionate job losses. Essentially, they are charged the price of owning a home because of the rapid rise in house prices resulting from historically low housing stock.
“For black Americans,” Yun continued, “in general, the greater likelihood of having student loan debt, combined with lower household incomes and accumulated savings relative to the national average, adds to the challenge.”
With the exception of people living in Asia and the Pacific Islands, black heads of households had a higher percentage of student debt than Latinos or whites. While 21% of whites had student debt of $ 30,000, according to the NAR, black student debt averaged $ 40,000 and affected 43%. Latino student debt was the lowest at $ 20,000, while that held by Asia / Pacific islanders was highest at $ 42,600.
In December 2020, according to NAR, the median price of an existing home was nearly $ 309,800, 13% more expensive than the previous year and more than 40% higher than five years ago. In 2019, the median income of blacks was less than $ 70,000, while that of whites in the same year was $ 90,000.
Groups like CRL, National Fair Housing Alliance, National Consumer Law Center and many others are pushing for funding that will help preserve homeownership with a $ 10 billion housing assistance fund that would provide direct payments to homeowners for mortgages, utilities, property taxes, property insurance and other related housing costs.
Advocates are also asking for $ 100 million for housing advice and $ 40 million for the Fair Housing Initiative to help families disproportionately affected by COVID-19. They point out that previous federal programs, such as the Treasury’s Toughest Fund, were designed to help struggling homeowners during the 2008 housing crisis, but came too late and brought little benefit. relief to communities of color. Black and Latino communities needlessly lost $ 1 trillion in wealth during the Great Recession.
Public policies and broad societal discrimination have created many economic inequalities today. Now is the time to correct the evils of systemic discrimination. And it is the government’s duty to ensure that the hardest hit communities receive their fair and equitable share of relief.