Category Archives: COVID 19

Minority Businesses Continue to be Disproportionately Impacted by COVID-19

Minority business owners have suffered great losses in 2020 thus far, according to a report published by the National Bureau of Economic Research.

Read Full Report: The Impact of Covid-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey (By Robert W. Fairlie, NBER Working Paper No. 27309)

The number of active business owners in the United States of America is down by 2.2 million, or 15 percent, from February 2020, but up 7 percent since the low in April, according to a recent analysis report by the National Bureau of Economic Research (NBER).

A working paper published by the National Bureau of Economic Research said that small business owners of ethnic groups in the United States continue to be disproportionately impacted by COVID-19. In breakdown, African-American business owners are hardest hit by COVID-19 with a drop of 26 percent in business activity from pre-COVID-19 levels.

Asian business owners dropped by 21 percent and Latinx business owners down 19 percent. Immigrant business owners experienced substantial losses of 25 percent, according to the paper.

The NBER paper argued that the negative impacts of COVID-19 on minority- and immigrant-owned businesses, if prolonged, could be problematic for broader racial inequality because of the importance of minority businesses for local job creation, economic advancement, and longer-term wealth inequality.

Meanwhile, mood of pessimism pervades among small business owners. The latest Small Business Pulse Survey carried out by the US Census Bureau shows that 37.7 percent of small business owners felt large negative effect by the COVID-19 pandemic, and 45 percent of them felt moderate negative effect.

As lifeblood of the US economy, small businesses accounted for 44 percent of all economic activity and created two-thirds of net new jobs before the pandemic, according to the Small Business Administration (SBA).

In an effort to support small businesses during the COVID-19 pandemic, the US Congress in late March approved 349 billion dollars to the Paycheck Protection Program (PPP). The program, however, ran out of money within two weeks due to high demand. In late April, an additional 310 billion dollars went to the PPP as part of the relief package passed by the Congress.

The program is intended to help small businesses retain their employees during the pandemic, offers support for businesses with fewer than 500 employees and allows companies to have their loans forgiven if they spend the money on payroll, rent, mortgage interest and utilities.

However, as small businesses scramble to apply for loans under the PPP, a few not-so-small companies secured millions of dollars of aid, sparking public outrage and raising questions about the relief package.

The picture looks grim as well for the Economic Injury Disaster Loan Advance (EIDL) program, another measure offering grants of up to $10,000 to entrepreneurs. It has ended after reaching the 20 billion dollars funding limit allowed by Congress, the Small Business Administration announced.

Source: National Bureau of Economic Research (NBER)

Wells Fargo Bank Donates $400M to Small Businesses Recovery Efforts

We’ve got to help these businesses if we want them to survive the combination of the COVID shutdown and the recession. -Jenny Flores, Head of Small Business Growth Philanthropy

Following an April 2020 industry-leading commitment to donate all gross processing fees from the federal Paycheck Protection Program (PPP), Wells Fargo (NYSE: WFC) has unveiled the details of an approximately $400 million effort to help small businesses impacted by the ongoing COVID-19 pandemic keep their doors open, retain employees, and rebuild. Through Wells Fargo’s new Open for Business Fund, the company will engage nonprofit organizations to provide capital, technical support, and long-term resiliency programs to small businesses with an emphasis on those that are minority-owned businesses.

Through June 30, 2020, Wells Fargo funded loans under the PPP for over 179,000 customers, with an average loan amount of $56,000, totaling $10.1 billion. Of the loans made, 84% of those are for companies that have less than 10 employees; 60% were for amounts of $25,000 or less; and, 90% of these applicants had $2 million or less in annual revenue. Given the federal government’s extension of the PPP, Wells Fargo will reopen its PPP loan application process to eligible customers as soon as possible through a link in Business Online Banking ® or CEO®.

“By donating approximately $400 million in processing fees to assist small businesses in need, Wells Fargo’s Open for Business Fund creates opportunities for near-term access to capital and addresses the road ahead to meaningful economic recovery, especially for Black and African American entrepreneurs and other minority-owned businesses,” said Wells Fargo CEO Charlie Scharf. “Wells Fargo is committed to helping small businesses impacted by COVID-19 stay open and get back to growth.”

According to data from Wells Fargo’s June Gallup/Small Business Index, more than half of small business owners surveyed expect either stagnant or decreasing revenues in the coming 12 months.

Accelerating Small Business Recovery for Communities in Need

The Open for Business Fund’s initial grants will allocate $28 million to Community Development Financial Institutions (CDFIs), also known as nonprofit community lenders, aimed at empowering Black and African American-owned small businesses, which are closing at nearly twice the rate of the industry, according to the National Bureau of Economic Research. Among the first grantees:

  • Expanding Black Business Credit Initiative (EBBC) will support the launch of the Black Vision Fund to increase the flow of capital to Black-focused CDFIs for transformational work to close the racial wealth gap in African American communities. The CDFIs will also receive capital for urgent deployment to impacted businesses in the Mid-Atlantic, Southeast, and Midwest.
  • Local Initiatives Support Corporation (LISC) will provide grants and low cost capital to more than 2,800 entrepreneurs with a focus on preventing loss in revenue, sustaining employment, and averting vacancies among vulnerable small business owners in urban and rural markets nationwide.

“Black businesses have faced the largest shutdown of any diverse group in the country,” said Ron Busby, Sr., CEO of U.S. Black Chambers, Inc. “We lost 41%, or 450,000 Black-owned small businesses, in this pandemic so far and all of those businesses provided jobs so we need to accelerate an economic agenda that helps them recover. The funding that Wells Fargo is putting back into Black businesses and other minority-owned small businesses across the country is truly going to be appreciated and will give the kick start entrepreneurs need to continue and grow.”

Beginning today, the Open for Business Fund is accepting applications from CDFIs and special purpose funds formed by CDFIs serving racially and ethnically diverse small businesses for its first grant cycle, open now through August 7. Additional grant cycles focused on technical assistance and recovery and resiliency will open later this year. Nonprofits can learn more at www.wellsfargo.com/about/corporate-responsibility/community-giving.

Small business sentiment

The Small Business Index, which provides a quarterly pulse check of sentiment from small business owners on their economic situations and the wider economic landscape, highlighted higher optimism on their financial outlook in June than in April. However, this was still 19% lower than in January, prior to the outbreak of COVID-19. In specifically oversampling African American, Hispanic, Asian, and women business owners, June’s survey also observed that 52% of these owners felt the U.S. economy was in a recession or depression, while 26% said they did not feel very prepared or at all prepared for the economic downturn from the pandemic.

“June’s survey saw business owner optimism increasing as reopenings have been getting underway, but the overall data shows that for many, there’s still a long road to recovery,” said Mark Vitner, chief economist at Wells Fargo. “The pandemic’s effects are also still being sorted out as communities across the country are in different stages of recovery, so optimism around indicators like revenues and number of jobs will continue to shift as those stages progress.”

Contributing to the Small Business Ecosystem

Building a thriving small business sector has a lasting impact on communities and on job creation. Since 2015, the $175 million Wells Fargo Diverse Community Capital program has enabled more than 90 CDFIs to finance $1.6 billion in loans and offer 1.8 million hours of training to diverse small business owners, which have helped them sustain 195,000 jobs.

As part of the Diverse Community Capital program, the Wells Fargo Foundation and the National Association of Latino Community Asset Builders started the nation’s largest loan fund for Latino-owned small businesses with a $10 million grant.

Separately, in March, Wells Fargo announced it aims to invest up to $50 million in Minority Depository Institutions (MDIs) as part of its commitment to support economic growth in African American communities where MDIs, often community-based banks, provide mortgage loans, small business lending, and other banking services.

SmalI Business Index Methodology

Results for Wells Fargo/Gallup Small Business Index survey are based on web interviews with 1,478 small business owners, conducted during the period of May 29-June 5, 2020. This survey also included an oversample of diverse segments — ensuring a minimum of 300 interviews each among African American, Asian, and Hispanic small business owners. Beginning in second quarter 2019, the interview process formally transitioned from outbound phone data collection to a national small business web opt-in panel provider.


Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.98 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment, and mortgage products and services, as well as consumer and commercial finance, through 7,400 locations, more than 13,000 ATMs, the internet (wellsfargo.com), and mobile banking, and has offices in 31 countries and territories to support customers who conduct business in the global economy. With approximately 263,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Source: Wells Fargo (NYSE: WFC)



MBDA Awards $10 Million in Federal Funding Under the CARES Act

The United States Department of Commerce, Minority Business Development Agency (MBDA) announced the deployment of $10 million in CARES Act funding to the network of MBDA Business Centers and national minority chambers of commerce.   The grants will be used for education, training, and advising small and minority business enterprises in their recovery from the effects of the COVID-19 crisis.

“The Trump Administration is committed to helping minority businesses access the resources they need to rebound from unexpected challenges and allow distressed communities to thrive through private investment and federal support,” said Secretary of Commerce Wilbur Ross. “These CARES Act grants, in addition to the nearly 9,000 Opportunity Zones across the country, ensure that minority-owned businesses have focused support in addressing critical funding, contracting, and operational needs in the unique circumstances resulting from COVID-19.”

“MBDA recognizes that minority communities and businesses have been particularly hurt and continue to face enormous challenges due to COVID-19,” said David J. Byrd, MBDA National Director.  “Many of these small businesses now, more than ever, need access to the available resources from the federal government.  Our network of MBDA Business Centers and national minority chambers of commerce have been on the front lines. The CARES Act funding will help them implement programs that will assist more minority businesses in preventing, preparing for, and responding to the COVID-19 pandemic.”

The CARES Act funding was distributed to existing MBDA Business Centers and national minority chambers of commerce who have the infrastructure to provide national coverage and the capacity to implement nationwide programs that reach large quantities of minority business enterprises.

Funding is provided for a twelve-month period from June 1, 2020 through May 31, 2021.  For additional information on MBDA and CARES Act funding, visit www.mbda.gov.

CARES Act awards were made to the following organizations:

  • Arizona Hispanic Chamber of Commerce, Inc. (Phoenix, AZ)
  • Asian, Inc. (San Jose, CA)
  • Asociacion Productos De Puerto Rico, Inc. (Puerto Rico)
  • Business Outreach Center Network, Inc. (New York, NY)
  • Caldwell & Associates, Inc. (Baltimore, MD)
  • California Asian Pacific Chamber of Commerce (Sacramento, CA)
  • Capital Region Minority Supplier Development Council, Inc. (Washington, DC)
  • Chicago Minority Supplier Development Council, Inc. (Chicago, IL)
  • Chicago Minority Supplier Development Council, Inc. (St. Louis, MO)
  • City of Tacoma (Tacoma, WA)
  • Dallas/Fort Worth Minority Supplier Development Council (Dallas, TX)
  • DESA, Inc. (Columbia, SC)
  • El Paso Hispanic Chamber of Commerce (El Paso, TX)
  • Georgia Tech Research Corporation (Atlanta, GA)
  • M. Gill & Associates, Inc. (Miami, FL)
  • Metropolitan Economic Development Association (Minneapolis, MN)
  • Michigan Minority Supplier Development Council, Inc. (Detroit, MI)
  • Mid-South Minority Council TADP Inc. (Memphis, TN)
  • National Business League
  • National Urban League
  • Rocky Mountain Minority Supplier Development Council (Denver, CO)
  • So. Cal. Corporate Growth Partners (Pasadena, CA)
  • South Bronx Overall Economic Development Corporation (South Bronx, NY)
  • The Enterprise Center, Inc. (Philadelphia, PA)
  • The National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship
  • The University of Texas at San Antonio (San Antonio, TX)
  • United States Hispanic Chamber of Commerce
  • University of Hawaii Systems (Honolulu, HI)
  • USBC Community Economic Development Corporation

 

About the Minority Business Development Agency (MBDA)

The United States Department of Commerce, Minority Business Development Agency (www.mbda.gov) is the only federal agency solely dedicated to fostering the growth and global competitiveness of U.S. minority business enterprises.  MBDA programs are focused on economic empowerment and leading minority business enterprises through business transformation. For 50 years, MBDA has helped minority-owned firms get access to capital, contracts, build scale and capacity, and expand into new markets.

Source: MBDA



Spanx Founder Donates $5M to Support Female Entrepreneurs

Sara Blakely and The Spanx by Sara Blakely Foundation has donated $5 million to support female entrepreneurs during the coronavirus pandemic. Ms. Blakely announced the gift in a thoughtful Instagram post and indicated, “My hope is that this gift will help alleviate some of the pressures caused by this horrible pandemic. I know first hand what it’s like to be a small business owner. As a woman it can be lonely and scary, especially during a time like this.”

Global Giving, a nonprofit crowdfunding platform for grassroots charitable projects, will be administering the Red Backpack fund and application process, making 1,000 grants of $5,000 each to female entrepreneurs in the United States from April through August.

In adddition to the financial award, each recipient will also receive her very own “lucky” red backpack, the official icon of The Spanx by Sara Blakely Foundation. The online education platform, MasterClass, will also provide all 1,000 recipients with a free annual all-access pass to their 80+ MasterClass sessions.

To apply, visit GlobalGiving.org/redbackpackfund.

TRUFUND LAUNCHES $5M RELIEF FUND TO SUPPORT DISADVANTAGED BUSINESSES

New York, NY – April 7, 2020 Today, TruFund Financial Services, Inc. launches a $5 million small business emergency relief fund to help curb job loss and permanent business closure as a result of COVID-19.  The fund aims to help at least 3,000 disadvantaged firms with loans, grants, resiliency training and one to one business advisory services.

“The economic impact of the novel coronavirus will be unparalleled for all small businesses, but for disadvantaged minority and/or women owned businesses the adverse impact will be disproportionate,” said James Bason, President & CEO, TruFund Financial Services, Inc.  “TruFund is determined to help these disadvantaged business owners and bridge the gap to other available resources.  This fund will give thousands of small business owners a fighting chance to maintain operations during this uncertain time.

“The Federal Coronavirus Aid, Relief, and Economic Security (CARES) Act provides significant new resources for small businesses; however, some entrepreneurs will have needs beyond what is covered by the federal programs,” said Myla R. Poree, Vice President and Director of Disaster Response & Recovery, TruFund Financial Services, Inc. “TruFund has identified additional areas of need and has developed its relief program to help fill some of these gaps.”

TruFund’s small business COVID-19 relief fund is a follow up to its Small Business COVID19 Response Survey launched on March 16, 2020.  The fund will include grants up to $10K (to qualified applicants), no application or closing fees for loans up to $75K. Loan interest will accrue at 3% and payments may be deferred for 9-12 months.  These funds may be used for operating expenses. Businesses started prior to August 2019 located in Alabama, Louisiana, New York, Northern New Jersey and Texas with a demonstrated economic injury from COVID-19 are eligible for assistance.

In addition to financial assistance and emergency loans, borrowers have the opportunity to utilize one-on-one loan application preparation assistance; and receive support in the development of individual resilience action plans.  To support business continuity during and after the COVID-19 crisis, TruFund will provide access to a virtual resiliency-focused, cohort-based training program, as well as, virtual resource information sessions.

TruFund’s small business COVID-19 relief fund is being launched with funding support from several of the organization’s bank, corporate, and philanthropic partners. If you would like to donate to the small business COVID-19 relief fund please go to Give to Small Business COVID 19 Relief Fund.

For additional information, please visit TruFund COVID19 Response.