Stephanie Jones is CEO, National Blacks in Travel and Tourism Collaborative.
As it appears that we will usher in a new era under a new administration in January, I am hopeful that more will be done by the incoming administration to level the playing field for Black-owned businesses in the U.S.
President-elect Joe Biden made a bold statement that he plans to reciprocate the support of the Black community that helped him and vice president-elect Kamala Harris flip Georgia and Michigan and secure the win in Pennsylvania. The National Blacks in Travel and Tourism Collaborative (BTT) plans to hold him accountable for following through on that promise.
The Black community showed up strong for the president-elect, so we need his words to become tangible actions that better position Black businesses to access financing for startup, growth and expansion. Traditionally, Black entrepreneurs and business owners have not been able to access capital through banks, and when they do, it comes with a much higher interest rate and access to far less financing than white-owned businesses.
BTT works to level the playing field for Black-owned travel and tourism businesses and students to access opportunities to fully participate in the travel and tourism industry. Prior to Covid-19, most Black-owned small businesses were faced with barriers to access capital for business startup and growth. The red tape and amount of paperwork required by local governments and the Small Business Administration (SBA) to access financing has long been a barrier for both existing businesses and those who may have considered entrepreneurship as a pathway toward the American Dream.
Recently, the Hospitality and Commerce Job Recovery Act of 2020, a bipartisan bill, was introduced to provide targeted economic relief for struggling travel-related businesses. The bill would stimulate the economy by creating recovery incentives for hospitality and trade shows, enhance the employee retention tax credit to help maintain worker connections to their employer and provide recovery incentives for middle-class families to jump-start travel when safe. While the bill does not specifically make reference to supporting microbusinesses in underrepresented communities, we hope that Black and brown workers in hospitality as well as Black meetings and events businesses will be able to tap this bill for recovery assistance.
We're hopeful the new administration will make it a top priority to work with Congress to pass another much-needed stimulus plan. The SBA Disaster Loan and PPP programs proved to be disastrous for most small Black businesses, which applied and received very little to no financial support. The SBA and U.S. Treasury both need to do more to redefine the various levels of small businesses to ensure future relief programs are not monopolized by so-called small businesses that were able to qualify and were given the majority of funding from the first two rounds of the PPP program.
According to August survey results conducted by the advocacy group Small Business Majority, the program appeared to reach a lower proportion of Black-owned businesses in particular. In that poll, 23% of Black business owners who did not receive PPP or Economic Injury Disaster Loans said their PPP applications were denied, compared with 9% of white business owners, 13% of Latino business owners and 9% of Asian American business owners.
Independent survey results and analyses of the geographic distribution of PPP loans, meanwhile, have highlighted some disparities. An analysis by the New York Fed's Claire Kramer Mills and Jessica Battisto found that multiple counties with a high number of Black business receipts, including Wayne County, Mich. (where Detroit is located) and Prince George's County, Md. (which borders Washington), were among the counties with the lowest rates of PPP allocation. In Wayne County, where more than a third of businesses are Black-owned, just 12.9% of businesses obtained loans, compared with a nationwide rate of 18.9%, according to data released by the SBA in August.
These gaps were driven by a couple of factors, including systemic inequities in banking, a chaotic application process that overwhelmed many small businesses and restrictive terms on the loans that put off some business owners from pursuing them at all. The distribution of PPP was among the factors the New York Fed researchers examined in trying to understand why an estimated 41% of Black-owned small businesses became inactive during the early months of the pandemic, more than double the 17% of white-owned businesses that did.
An Office of Entrepreneurship (OOE) within the incoming administration should provide oversight of SBA programs. In addition, the OOE should comprise a very diverse group of appointed business and community leaders representing key industries, including travel. It is utterly important that there is representation for Black businesses to ensure that initiatives and efforts through the OOE are designed to provide a hand up and not a handout for supporting and sustaining Black businesses to create economic impact through job creation and economic development for Black communities.