Tag Archives: Paycheck Protection Program

What’s In The Pipeline To Revive Ethnic Small Businesses?

Main Street America, its plethora of largely minority-owned small businesses ravaged by the COVID-19 pandemic, will see opportunities to revive with the help of federal stimulus funding, a May 29 group of panelists concluded.

Speakers at the discussion, organized by Ethnic Media Services, included Rep. Ted Lieu, D-California; businessman and philanthropist Charles Phillips, director of the New York Federal Reserve Bank; venture capitalist Shelly Kapoor Collins, a member of California Governor Gavin Newsom’s Entrepreneurship Task Force; and Sumita Batra, CEO of ZIBA Beauty Salons.

More than 100,000 small businesses have had to shut their doors permanently, according to a study released in April by the National Bureau of Economic Research. Of the businesses it surveyed, 43% have closed temporarily and owners have laid off 40% of their staff.

Six out of 10 small businesses will close by Labor Day if the current environment continues, reports the National Federation of Independent Businesses. In California, 95% of businesses are classified as small businesses.

Congress’ $350 billion stimulus package — approved in April and known as the Paycheck Protection Program — is a loan program to help small businesses survive during the COVID 19 pandemic by providing eight weeks of payroll and some additional funds for operating expenses. The Small Business Administration defines small businesses as those with fewer than 500 employees.

Fourteen days after the program began, it ran out of funds. Money had been quickly gobbled up by larger businesses — many backed by venture capital — and by hotel and restaurant chains with fewer than 500 employees at various locations.

“It wasn’t even a fair fight,” said Phillips.

Larger entities had relationships with big banks and artificial intelligence bots that filled out loan applications, he explained. Smaller businesses, also known as micro businesses, normally are funded by Community Development Financial Institutions, not by large banks. Of the more than 1,000 CDFIs in the United States, only 90 participated in the first round of stimulus funding, said Phillips, noting that the process for applying was extremely difficult.

Many micro businesses are sole proprietorships, especially in the African American small business community. Such businesses were unlikely to receive PPP loans because they had no employees and thus no documented payroll. Phillips gave the example of a barbershop where the owner simply rents out chairs to barbers who are independent entities. For many micro businesses, payroll is not its largest expense, but the PPP program stipulates that 75% of the loan must be used to cover payroll.

Phillips expressed optimism for the second round of funding, an additional $484 billion approved by Congress in late April to keep the PPP program going. It set aside $60 billion to be distributed by smaller banks with less than $50 billion in assets.

In this round, 324 CDFIs are participating, and an additional $10 billion was set aside specifically to channel loans through them.

Loan amounts also have dropped, from $260,000 in the first round to an average $115,000, which means smaller businesses are applying and getting funded,  Phillips said. To date, about 4.5 million loans have been distributed.

Rep. Ted Lieu, who represents California’s 33rd Congressional District, said Democrats fought hard to make the second round of stimulus funding accessible to businesses with fewer than 20 employees. The challenge, however, lies in letting business owners know these funds are available.

Re. Lieu used his own immigrant parents, who ran a small gift shop as an example of a typical very small business: “We had no idea what a chamber of commerce was. We had no idea what really was happening in most of government. We were just trying to survive and try to sell gifts and make sure that we had money to make payroll,” he said.

Every member of Congress has a staff member dedicated to helping business owners manage their PPP loan applications, Rep. Lieu noted, and added that he is advocating for future rounds of stimulus funds. “We just have to provide additional sustenance to the American people, both to families and to businesses.”

Even if governments all across America lifted the stay-at-home orders, the economy would still be sluggish, he said. “People are simply not going to engage in a lot of activities that they previously did because they want to protect themselves and their families. That’s going to keep our economy slow until there’s a drug therapy or a vaccine.”

During the briefing, the congressman lambasted President Trump for refusing to wear a face mask: “I think it’s shameful and disgraceful of the president of the United States not to wear a mask in public and to post things on his social media that suggest people shouldn’t wear a mask. It is a ridiculous way to govern.”

Shelly Kapoor Collins, a general partner at the Shatter Fund, which invests in women-founded businesses, said even in a good economy, women get only 2% of venture capital funds. “So, can you imagine what will happen in a post COVID era?”

Collins, who also served in the Obama administration’s National Women’s Business Council, stressed the importance of ensuring that women have access to capital to start and grow their businesses. About 12.3 million businesses nationwide are owned by women. They employ nine million people and generate $1.7 trillion in revenue.

“If women continue to scale their businesses, we have the opportunity to grow our GDP by $500 billion,” Collins said.

The United States must have an economy that includes businesses owned by diverse founders, she said, “especially [in] minority communities and especially [by] women. It’s the right thing to do, without which we cannot have a full economic recovery.”

Sumita Batra shared the story of ZIBA Beauty Salons, a business her mother founded that brought the centuries-old beauty technique of threading to this country. In March, before Newsom issued his statewide stay-at-home orders, Batra made the difficult decision to close all 14 branches of her salon and laid off 144 employees. Their final paychecks came out of her personal savings.

She applied for a PPP loan when the program began and received funds 10 weeks later. Those funds can only be used for operations and payroll after receipt and not for past debts, such as unpaid rents or leases.

Touch-based services, such as threading and nail salons, will have a harder time recovering postpandemic. Batra said she will not re-open her salons until she can ensure that her employees and clients are absolutely safe. She advocated for having stimulus funds directed specifically to services like her own.

“Touch services coming back too soon will be one of the things that ends up spreading COVID,” Batra said.

Photo, Top: Charles Phillips, a director of the Federal Reserve Bank of New York (left); Rep. Ted Lieu, D-California. Bottom: Sumita Batra, CEO, Ziba Beauty Salons (left); venture capitalist Shelly Kapoor Collins, member of California Governor Gavin Newsom’s Entrepreneurship Task Force. (photos provided)

Vulnerable Immigrants Get No Relief From COVID-19 Stimulus Package

The Coronavirus Aid, Relief, and Economic Security Act, signed into law last month, offers little relief to millions of vulnerable immigrants and low-wage workers, said panelists during a media briefing here April 9.

The CARES Act was signed into law by President Donald Trump March 27. It was intended to help millions of workers who have lost their jobs as shelter-in-place orders are implemented around the nation to mitigate the community spread of the novel coronavirus. The relief package also provides small businesses with the Paycheck Protection Program, allowing them to keep employees on payroll for up to eight weeks.

But millions of people — including the undocumented, and those who have no social security number — will receive no relief, said panelists at the briefing, organized by Ethnic Media Services and supported by the Blue Shield of California Foundation.

“The bills that have passed Congress so far have not provided enough economic support or health coverage for immigrants including those who have protection under Deferred Action for Childhood Arrivals and Temporary Protected Status and others,” said Kerri Talbot, director of federal advocacy at the Immigration Hub. “We’re really concerned that during this crisis people are not going to be able to access the health care that they need because they are not covered by emergency Medicaid,” she said, noting that denying aid to vulnerable immigrants puts all communities at risk.

Speaker Stacie Walton, MD-MPH (above) presenting on the 4/8 conference.

Individuals in “mixed households” — in which one or more persons are undocumented, but living with U.S. citizens, such as children or spouses — will not receive a one-time $1,200 relief check, said Talbot. “At the very least Congress needs to make sure that people who were born here should have access to cash payments and we believe undocumented individuals should as well. So many are are doing essential services,” she said. Immigration Hub is advocating for relief for undocumented people, including DACA and TPS recipients, to be included in the proposed fourth stimulus package.

Some safety nets have been beefed up, said Talbot, noting that more than $3 billion has been allocated for community health clinics, and $450 million has been allotted to food banks.

Sunita Lough, the Internal Revenue Services deputy commissioner for services and enforcement, said the one-time $1,200 stimulus package checks will be deposited into bank accounts on April 17, if the IRS has direct deposit information for the eligible recipient. Each individual with a social security number, who cannot be claimed as a dependent on anyone else’s tax return, is eligible for a stimulus check, she said.

Those who have not provided direct deposit information to the IRS will get a paper check instead, which will take much longer, said Lough. She advised taxpayers to go online to https://whereismyeconomicimpactpayment to fill in direct deposit information. The website, which goes live on April 17, will also allow users to track their stimulus checks and when they will receive them.

Lough cautioned against the many imposter scams that have emerged in the wake of the pandemic. “Do not give your private information to anyone who says I can get your check for you,” she stated.

If an individual owes back taxes, the IRS will not take out money from the stimulus check, clarified Lough.

Sebastian Sanchez, staff attorney of the employment rights project at the law firm Bet Tzedek, told reporters at the briefing that “gig workers” — contract workers, who now make up one-third of employees in several states — are eligible for unemployment benefits under the CARES Act. Normally, gig workers would not be eligible, because they had not left or been laid off by an employer, a mandate for unemployment benefits. Sanchez said that though they are eligible, there will be some delays, as states attempt to restructure their programs to meet new federal guidelines. The stimulus package also provides an additional benefit of $600 per week to unemployed workers, but this too has not yet been implemented, said Sanchez, adding that laid-off workers and employees furloughed without pay can expect to see those additional benefits by the week beginning April 13.

California workers can claim up to 38 weeks of unemployment through the state’s Employment Development Department.

State disability insurance may be available to undocumented workers, if they have been paying into the system by deductions on their paychecks, said Sanchez. Undocumented workers with fake social security numbers should not perjure themselves to get benefits, he said, advising instead that they file paper forms and leave that information blank to later clarify with the EDD.

Medical experts at the briefing discussed the disproportionate impact of the pandemic on African American and Latino communities. Pediatrician Stacie Walton said: “When COVID-19 came on the scene, I knew we were going to have disproportionate numbers of African Americans affected; they are already experiencing an epidemic of deaths from other diseases.”

Walton said that many social determinants of health, including an unconscious bias by health workers, make African Americans more vulnerable.

Walton’s statements were borne out by University of California physician Tung Nguyen. “Stark and alarming disparities are emerging in places are reporting covid-19 data by race,” he said. In Chicago 52% of the covid-19 cases are among black residents who make up only 30 percent of the City’s population.

Only 14% of Michigan’s population is black but 33% of the COVID-19 cases are African Americans, said Nguyen. In Louisiana, 70% of deaths statewide are among black residents, though they only make up 32 % of the state’s population, said Nguyen, noting that similar disparities are coming out of North Carolina, Washington DC and Milwaukee.

He advocated for all public health departments to track COVID-19 information by race and ethnicity and urged all readers of ethnic media to write their members of Congress to also such data. Nguyen also sternly advocated for a nationwide shelter-in-place order. “It is criminal that some governors are not doing this. They are killing people. It is bad leadership.”

Sunita Sohrabji is a Contributor at Ethnic Media Services

Photo by Alexander Mils on Unsplash