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Federal pandemic aid finally trickles down to smaller enterprises

by Charles Hallman
July 29, 2020
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The Paycheck Prevention Program (PPP) has been extended through August 8. It’s taken time and two rounds of funding thus far for some of the billions in federal aid to reach smaller businesses and nonprofits.

In March, Congress initially authorized $350 billion in relief funds to the Small Business Administration (SBA) to help small businesses (500 or fewer employees) meet their payrolls if forced to close due to the pandemic. It was a first-come-first-served setup in hopes that the lion’s share of the loans, which would be 100 percent forgiven if 75 percent were used for paying employees, would go to small businesses.

However, the $350 billion reportedly had mostly gone in the program’s first 13 days to larger firms, country clubs, and private schools who got in line first for the PPP loans.

A National Federation of Independent Businesses survey found that only one in five small business owners were approved for PPP loans, and 80 percent didn’t get any feedback on their applications. It was also reported that the PPP application process was difficult to navigate.

Congress later authorized a second round of funds in April—$310 billion.

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“We did nine PPP loans,” said Peter McLaughlin, former Hennepin County commissioner, now executive director of the Twin Cities Local Initiatives Support Corporation (LISC), which works with businesses and other community infrastructure projects in 32 U.S. cities. It also provides grants to Blacks, women and other people of color who own small businesses or lead community-based organizations.

Sabathani Community Center, the Cultural Wellness Center, and the MSR were among those who received PPP loans said McLaughlin, who joined the organization in 2019 after nearly 30 years as a county commissioner.

“It was frustrating,” Cultural Wellness Center CEO Atum Azzahir recalled of her first unsuccessful attempt to secure a PPP loan. “We started the process last March with the bank. The bank was not giving us information through April and May.”

Azzahir added that the second application went much better with a two-to-three-week turnaround. “Our work would have suffered” without the loan, she said. We would have to shut down many activities we do on a regular basis.”

MSR Publisher Tracey Williams-Dillard added, “Receiving the PPP loan really assisted my business to not have to worry about payroll at this unpredictable time.” Our attempts to contact Sabathani about their loan were unsuccessful because their voice mailbox was filled.

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Courtesy of Twitter Peter McLaughlin

McLaughlin said of the PPP’s first round of loans, “[There] was a bias against organizations that were not as well established [with banks], and that kept the loans from going out to smaller people-of-color businesses.”

“We feel good about the work we’re doing,” McLaughlin continued. “We were attempting to overcome” what happened in the initial round “by reaching out specifically to businesses and nonprofits and organizations that were operating in the community and didn’t have a good experience in the first round. We were trying to make up for that.”

The LISC executive director said the country’s economic recovery will be a slow process. “The economic impact is going to be around for a while,” he said. “I think the [next] stimulus package will have to be a multi-layered package. We’re not through this crisis, and the federal government will need to step up and provide assistance to avoid us going into a protracted depression like we had in the ’30s.”

McLaughlin said that things can’t return to any so-called normal, especially for Blacks and other people of color. 

“A new normal right now is hurting people of color much harder than the majority communities,” he said. “It is going to take a while for that new normal to be created. I think that may take years.”

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Charles Hallman

Charles Hallman is a contributing reporter and award-winning sports columnist at the Minnesota Spokesman-Recorder.

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