The U.S. Small Business Administration(SBA) has been helping small businesses get on their feet by providing federal government aid, counseling, assisting, protecting the interests of small business concerns, preserving free competitive enterprise, and maintaining and strengthening the overall economy of our nation. While this is the foundation of the administration, during the Covid-19 pandemic, it exposed how many small businesses owned by Black men and women and other minorities did not receive the same support and funding as their white male and female counterparts.
One important person advocating for the initiative is the founder John Hope Bryant. “ The 21st century is about opportunity. It’s not about marching in the streets but doing business deals in the business suites,” Bryants says while emphasizing the importance of financial literacy. “ In entertainment, sports, and the arts, we are killing it but in business, financial literacy, and places where the real wealth is, we are behind because we do not know.”
In 2019 when the pandemic began, SBA was providing businesses with loans to support their operation, of the 3,485 minority applications approved, only 587 of them were Black business owners, 1,139 were Hispanic business owners, and 1,673 were Asian or Pacific business owners. This compares with 7,043 of White business owners approved. In the same year, the approval amount( in dollars) for all minorities was $1,973,916,600 with only $187,595,300 going to Black businesses, $411,787,100 directed to Hispanic business owners, and $1,327,554,300 going to Asian and Pacific-Islander business owners. White business owners received $2,986,021,000 in funding.
In 2020, the approval rate for Black businesses declined to 526 out of 3,272 of all minority applicants approved. Hispanic business owners saw a slight increase in approval numbers from last year by three, while Asian and Pacific business owners saw a slight decrease from last year, with numbers coming in at 1,509.
In 2021 out of 2,279 minority applicants approved, 434 were Black business owners. 748 Hispanic applicants were approved, while 1,030 applicants approved were Asian or Pacific. The number of applications approved for White business owners was 4,497, showing that all demographics saw a decrease in approval rate. The amount of money approved for each demographic also saw a decrease as Black business owners received $129,160,100 out of the $1,364,262,600 dispersed to minorities. Hispanics received $332,009,100 while Asians received $873,172,500. White business owners received $2,249,813,400 in funding from the SBA program.
Mayor Garcetti saw the effect Covid-19 had on the community, health-wise, but also on small businesses that support South L.A. and the economy of SoCal. With the help of council members, Garcetti is partnering with the SBA to launch Operation HOPE, an initiative to uplift small businesses through education, networking opportunities, and access to capital.
“It all starts with the small businesses here in L.A. This initiative is necessary because when we took to the streets two years ago to fight racism, it wasn’t meant to be forgotten,” Garcetti says while talking about the marches and protests in 2020 over racial injustice and police brutality. “ We have to be ongoing, intently, and see racial injustice, not as a one-day march but as a cause for our lives.”
Garcetti highlights that Black and Hispanic families have only one percent of the wealth compared to white families, who have 10 percent of the wealth in Southern California. But he is grateful for the progress from street vendors as some have moved into brick & mortar companies and can’t wait to see how small businesses take advantage of the resources around them.
Garcetti talks about how access to capital affects the probability of how successful a business is. “ Studies have shown that Latino and Brown Business owners look to their friends and families for funding while Black business owners look to banks and usage of credit cards.” Garcetti observes that while Los Angeles is underbanked, statistics have shown that regardless of skin color, people can still get approval if they have a brilliant idea and are working hard to execute it.
“It has been shown that Black people are three times more likely to get approved by banks for capital because of the lack of access and white people are more likely to get their profits negatively affected because of the cost for capital.” Garcetti highlights that in his studies that 60 percent of Black entrepreneurs do not ask for capital because they think they will not get approved by a lender.
Bryant explains that white people own 85 percent of small businesses’ wealth because they used the knowledge provided to them. He also acknowledges that discrimination against Black people is the cause of us being behind in the wealth gap.
“ We have been doing so much with so little for so long we can do anything with nothing. If you give us the knowledge, a business plan, and some support we will rise.” Bryant said while highlighting that in the last two years, Black business creation has peaked with Black women leading the way.
Isabella Casillas Guzman, the SBA Administrator, is supportive of the new initiative and Bryant. “ The SBA is about delivering the American dream of business ownership to everybody. It’s about leveling the playfield for all small businesses, and Joe Biden feels this is the only way to help rebuild the economy from the ground up.” Guzman highlights that over ten million jobs were created because of the emphasis on building small businesses.
“The president has made it clear since day one that we need to focus on racial equity and that the federal government will help advance inclusion and equity in this economy,” Guzman said.
Our Weekly coverage of local news in Los Angeles County is supported by the Ethnic Media Sustainability Initiative, a program created by California Black Media and Ethnic Media Services to support minority-owned-and-operated community newspapers across California.