Published in Economic Development

Minority-owned businesses face structural barriers as they seek COVID-19 recovery

BY Sunday, April 12, 2020 06:48pm

Leaders of Asian, Latino and African American business groups say their members face distinct challenges while recovering economically from the coronavirus, including a historical lack of access to capital, discrimination, immigration status and language barriers. 

Taken together, minority business leaders are concerned about the ability to access billions of dollars in small business relief from the federal stimulus package and are calling for more targeted and localized investment in their communities.

Left: Joe Jones, president and CEO of the Urban League of West Michigan, right: Bing Goei, chairman of the Asian Pacific American Chamber of Commerce COURTESY PHOTO

“As has been said, historically, when America gets a cold, black and brown folks get the flu,” said Joe Jones, president and CEO of the Urban League of West Michigan. “Now the question becomes: When America gets the coronavirus, what’s that mean for black and brown folks, especially as it pertains to a surviving business.”

Michigan Chief Medical Executive Dr. Joneigh Khaldun also told Bridge Magazine this month that there is “no question” the coronavirus outbreak is having a “more significant effect” on low-income and marginalized communities, “particularly communities of color.”

Jones, who represents the Second Ward on the Grand Rapids City Commission, pointed to “a system that’s been historically inequitable.” An increased focus will be needed to help marginalized populations and neighborhoods, he added, which includes changes to purchasing procedures that target minority-owned businesses.

The Urban League’s priorities include partnering with other community groups to promote buying local and “making it all the more easier for black- and brown-owned businesses to prosper,” he said.

Bing Goei, chairman of the Asian Pacific American Chamber of Commerce board, said “access to the decision makers” was among the top challenges for his members.

“We’ve historically been left out of the equation when it comes to participation,” said Goei, who is also CEO of Eastern Floral in Grand Rapids.

The Urban League, Asian Pacific American Chamber and the West Michigan Hispanic Chamber of Commerce are among the partners of the West Michigan COVID-19 Business Coalition, formed last month to coordinate resources in West Michigan.

Federal funding

Jamiel Robinson, founder of Grand Rapids Area Black Businesses, said a localized response to the challenges for minority-owned businesses will be crucial to make sure companies that may not qualify for federal loans “don’t fall through the cracks.”

He also raised concerns for up-and-coming business districts that have seen new investment in recent years. He cited the Madison/Hall corridor on Grand Rapids’ south side, as well as areas across the city’s Third Ward.

“Everyone is in a very rushed process to just be able to get relief out there. If we’re not intentional about all facets of our community being able to recover equally, we’re definitely going to be setting ourselves up for a longer challenge,” Robinson said. “Some communities and neighborhoods are just getting their legs under them.”

The CARES Act stimulus package signed by President Trump on March 27 includes $10 million in grants for the Minority Business Development Agency. Multiple sources for this story said they were not aware of the funding, while Goei said it’s “probably not enough.”

The House Democrats’ stimulus proposal in late March included a provision from Texas Congresswoman Sylvia Garcia for $3 billion in grants through the Minority Business Development Agency.

“It would be in the best interest of our city, state and country to take a look at the growing number of minority-owned businesses simply because the demographics are going in that direction,” Goei said. “It would be wise of us to invest sufficient dollars right now rather than when the crisis gets even worse.”

Access to capital

Among the top concerns for minority business groups in accessing stimulus funds is the historical lack of access to capital.

“To begin with, the Latino business community has been hurt with access to capital in West Michigan,” said Guillermo Cisneros, executive director of the West Michigan Hispanic Chamber of Commerce. “With lack of access to capital comes a lack of financial resources to fight this crisis. If the Latino business community was at a disadvantage even before the crisis, it’s getting worse when we’re going through these difficult times.”

A “high percentage” of the Hispanic Chamber’s members are in the food industry. A few days after the federal loan program opened, about 20 Hispanic Chamber members had applied among more than 400 businesses. Cisneros noted that Latino businesses’ economic impact in Kent County in 2016 totaled $1.1 billion. 

Challenges in accessing capital often stem from a lack of credit history or the ability to open bank accounts based on immigration status, Cisneros said, and “financial systems in Latin America are completely different” than in the U.S. 

Cisneros also cited language and technology barriers for some owners while navigating the U.S. Small Business Administration’s loan process available under the CARES Act. The Hispanic and Asian American chambers have launched workshops to help members through the loan application process. 

Cisneros also pointed to Minneapolis, which created a $5 million forgivable loan program to help renters and small businesses regardless of their immigration status, and hopes something similar can be done in Grand Rapids.

“If we don’t take action, a high percentage of the Latino business community will disappear in the next few months,” Cisneros said. “That’s very concerning. We definitely need to see if philanthropy would be able to support these efforts. It’s the only way for our Latino economy to survive here.”

‘Verbally abused’

On top of historical barriers for minorities, Asians in particular have faced racism and discrimination amid the fallout of COVID-19. The spread of the virus originated in the Chinese city of Wuhan last year, and critics say leaders — including President Trump — have fanned racial tension by referring to it as the “Chinese virus.”

Goei said the reports of discrimination toward Asian-American business owners is “very true,” noting business owners and residents in West Michigan have been “verbally abused.”

“We have incidents, but there are also those incidents that are not reported,” Goei said, citing cultural norms to avoid reporting incidents to law enforcement. “It is certainly not unexpected when some of us have received those types of verbal abuse and racist behaviors against us because we are Asian.”

Meanwhile, Goei is working his way through the federal loan application process for the Small Business Administration’s Paycheck Protection Program included in the CARES Act. He feels a distinct disadvantage compared to larger corporations with lobbying power and, for some, a history of financial support.

“For many of us who are small businesses, we haven’t received those types of government support,” he said. “I don’t know what impact that will have. My deep concern is the policies that are being implemented now are such that small businesses are going to be the losers and the big businesses are going to be the winners.”

Yet winners and losers may also play out along racial lines, as has historically been the case, said Jones of the Urban League.

“Understanding that whenever you have a significant disruption and a recession, the communities that are most impacted in a very devastating manner have been those historically marginalized,” he said. “If we’re not proactive, COVID-19 could create the same outcome.”

Read 2235 times Last modified on Monday, 13 April 2020 12:09
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