Black businesses, which already have major challenges in getting funding, have been hard hit by the pandemic. They also failed to receive pandemic government funding on the same level as white businesses. Yet Black-owned companies received just 1.9 percent of Paycheck Protection Program loans during the pandemic while white-owned businesses received 83 percent, reported Business Of Business. Acknowledging that non-white businesses have difficulty getting funding, the Treasury Department has announced $10 billion in funding for small, minority-owned businesses.
A survey from the Federal Reserve found that minority-owned small businesses are less likely than white-owned businesses to receive all the financing they seek.
The State Small Business Credit Initiative will be used to help startup companies gain access to capital in hopes of spurring economic recovery from the pandemic. The initiative will target small businesses that may have trouble getting capital.
The $10 billion will come from the $1.9 trillion coronavirus-aid package Congress passed in March 2021. According to the Treasury Department, the disbursement will begin in the first quarter of 2022.
To start, the State Small Business Credit Initiative will set aside $1.5 billion for businesses owned by socially and economically disadvantaged people. Another $500 million has been set aside for small businesses with fewer than 10 employees.
The program’s focus is to create a business sector that “does not leave people with good ideas and entrepreneurial energy behind because of where they want to start their business or the color of their skin or any other unacceptable barrier,” Gene Sperling, a senior adviser to President Joe Biden, told The Wall Street Journal.
States will design and determine how the funds are doled out. Georgia, for example, plans to use its expected $200 million allocation to expand loan programs it started in partnership with banks and community lenders during the earlier version of the program. The state also plans to start a new venture capital program, Holly Hunt, which manages Georgia’s State Small Business Credit Initiative program, told The Wall Street Journal.