Editor’s note: This is the first in a series of reports from TechWire examining the impact of COVID-19 on minority-owned businesses and efforts to provide relief.
ROSEVILLE — Dannesia Pullen owns PullenBoy Hauling, a trucking company headquartered in Rolesville. It transports dry goods and supplies statewide.
At the beginning of the year, business was good. “We were in the process of purchasing a third truck,” she says. “Shippers and third-party logistic companies were able to give us the rates.”
Then COVID-19 struck. Many warehouses and distribution centers closed; the demand for trucks declined, and rates plummeted.
“We have seen a 15-20 percent decline in cash flow,” she says.
Congress has authorized $660 billion in two rounds of federal emergency loans, including $60 billion for minority businesses that struggled to get it the first time.
But Pullen says she hasn’t seen any of it, and worries that she’s getting shut out. She applied the Economic Injury Disaster Loan and the Paycheck Protection Program (PPP), administered by the Small Business Administration (SBA); both times declined.
“When I see businesses like the NBA, Ruth Chris, and Potbelly receiving funding, I no longer have faith in the government,” she says.
Even in the best of times, minority-owned businesses face a tougher time gaining access to capital. But during a pandemic, many say it’s getting even harder. Lack of resources and access to networks, along with the government’s “first come, first serve” policy, is causing them to bear the brunt.
The Center for Responsible Lending, a non-profit group that combats abusive lending practices, says roughly 95 percent of black-owned businesses, 91 percent of latino-owned businesses and 75 percent of asian-owned businesses stand “close to no chance” of receiving a PPP loan through a mainstream bank or credit union.
“Unfortunately, like the initial PPP funding, most of these new funds will continue to go to larger, wealthier and less diverse businesses leaving smaller businesses owners of color excluded from the program,” said Ashley Harrington, director of federal advocacy and senior council for the Center for Responsible Lending in a statement.
The SBA has not shared loan disbursements by race, and doesn’t seem to be tracking. It did not include “optional standard demographic information for principals” on its PPP loan application form.
But that’s not to say minority-owned businesses aren’t vital to the economy’s recovery. Before the pandemic, data shows that it’s women and communities of color who were driving new business growth in the US.
The U.S. Census Bureau this week released new estimates showing 1.1 million employer firms were owned by women and 1 million by minorities. According to the 2018 Annual Business Survey (ABS), covering year 2017, 5.6 percent (322,076) of all U.S. businesses were Hispanic-owned and 6.1 percent (351,237) were owned by veterans.
Specifically, it’s women of color who are on the rise. Women-owned employer firms in the United States increased by approximately 2.8 percent in 2016 to 1,118,863 from 1,088,466 in 2015, the US Census reported. The number of businesses owned by Latinos also grew by more than 1 million, or 46.3 percent, from 2.3 million to 3.3 million. Today, about 1 out of every 7 businesses is run by a Latino entrepreneur.
And those businesses deserve the same access to those relief funds, the Center says.
In a May 15 letter to the SBA, it urged, among other things, to set aside $10 billion of PPP small business loan funding for loans by community development financial institutions (CDFIs) and minority-depository institutions (MDIs). The US Black Chamber is asking for similar changes to the rules.
Some denied, others wait
Meanwhile, local groups, like Wake Tech and the Carolina Small Business Development, are setting up funds to help fill in the gaps in relief.
For Pullen, this has been a lifeline. She has received $2,000 from Wake Tech’s fund, enough to pay her drivers. She was not eligible for Carolina Small Business grant because she doesn’t have a storefront.
Still, she says it’s enough to tide her over: “As an owner, I don’t collect a salary so we are able to survive this period.”
Durham tech startup founder Kimberly Williams Moore also got her funding request denied. Earlier this year, she launched Ark Mobile, a social network for pets, along with an app that uses artificial intelligence to aggregate pet resources.
“We have definitely not been able to pick up the phone and get a PPP loan,” she says. “What we’re finding, if you did not know some of the staff at these banks, you’re not getting to the next step. Bankers are making choices. We call it ‘white glove service,’ and generally the African American businesses aren’t getting the white glove service, even before this happened.”
Moore, however, isn’t giving up. She will continue to bootstrap the company, while running her own marketing consultancy and looking at other options:“This will not deter us,” she said.
Gloria Shealey, meanwhile, has had a little more luck. She runs The Daniele Company, an African-American, woman-owned commercial construction company in Durham. She received PPP, but doesn’t want to disclose how much.
Before the pandemic hit, she was on track to slightly exceed 2019 revenue. Now, she says her cash flow is “manageable” and she hasn’t been forced to lay off any of her seven workers.
“Our company is reasonably good only because we were deemed an essential business,” she said. Even so, when she looks around at her peers, she feels minority-owned businesses are getting hit harder: “There was not an intentional program strategy or process for inclusion of small, diverse, local, or women-owned businesses. An effort has been made in the second round but there was already a cue. There are many companies at large that will not recover.”
Latangela Hyman hopes to be one of the survivors. She runs Christian book and supply store, A Peace of my Passion, in Knightdale. In March, she saw her revenue drop more 70 percent, and then they were basically closed in April with the exception of a few supply needs. She’s managing to keep the doors open after receiving a $2,500 grant from Wake Tech and a loan from the Golden Leaf foundation.
“It’s been an earth-shaking experience considering the length of time we’ve been in a brick and mortar,” she said. “We are paying our store’s lease, utilities, invoices on our software lease, Easter and [other] materials that we weren’t able to sell during stay-at-home order, and purchase re-open inventory.”