Chair Beatty Demands Greater Access to Assistance for Women- and Minority-Owned Businesses to Weather COVID-19’s Financial Storm
WASHINGTON, D.C.—The House Financial Services Subcommittee on Diversity and Inclusion, chaired by U.S. Congresswoman Joyce Beatty (OH-03), conducted a hearing today entitled, “Access Denied: Challenges for Women- and Minority-Owned Businesses Accessing Capital and Financial Services During the Pandemic.” The Subcommittee’s hearing focused on identifying policies and proposals to ease impediments on minority- and women-owned businesses’ access to capital, credit-based tools and financial products.
“We must eliminate the systemic gender and racial barriers that impede the formation and competitiveness of minority and women-owned businesses,” Beatty said to open the hearing. “These businesses face an uneven playing field when it comes to accessing capital as well as leveraging loans and other credit products necessary to fund and sustain their businesses.” She continued, “In fact, at a time when small businesses overall experienced a 22 percent closure rate from February to April of 2020, the closure rates for minority-owned businesses were significantly higher. Over the same period, 41 percent of black-owned businesses, 32 percent of Latinx-owned businesses and 26 percent of Asian-owned businesses closed. That is why today’s hearing is so important—we need to know what is at stake because without small businesses, the economy will not grow.”
Three months prior to the Financial Services Diversity and Inclusion Subcommittee’s hearing, the Federal Reserve Bank of New York reported that minority- and women–owned businesses are “significantly more likely to show signs of limited financial health” and are twice as likely to be classified as “at risk” or “distressed” than non-minority small businesses. They further stated that distressed companies are “three times as likely as healthy businesses to close because of a two-month revenue shock.” Moreover, recent analysis by the Color of Change and Unidos US on the Paycheck Protection Program (PPP)—established under the CARES Act and administered by the U.S. Small Business Administration (SBA) and U.S. Department of Treasury as a funding lifeline for distressed businesses during the COVID-19 Pandemic—found that only 1 in 10 African-American and Latinx-owned businesses received requested PPP funds.
“I have heard from many minority-owned businesses who did everything right, yet did not get a loan number or loan in the first round of PPP funding,” Beatty added. “Thanks to the partnership of Financial Services Chairwoman Waters and Small Business Chair Velazquez adjustments were made in the second round of funding.” She then noted, “However, SBA’s own analysis concluded that only 23 percent of PPP loan money, or $119.8 billion dollars, went to businesses in economically distressed areas. While those are significant numbers, we can and must do more to support the nearly 45 percent of Black and Latinx-owned businesses who remain in danger of permanently shutting their doors this year.”
During the July 9th hearing, Subcommittee members heard from an expert panel of witnesses who echoed Beatty and a bipartisan majority of her colleagues in acknowledging the obstacles and work ahead, including potential legislative remedies to drive more federal assistance and improve access to capital for women- and minority-owned businesses. Panelists included: Ron Busby, Sr., President and CEO, U.S. Black Chambers, Inc.; Carmen Castillo, Chairwoman of the Board of Directors, U.S. Hispanic Chamber of Commerce; Karen Kerrigan, President and CEO, Small Business and Entrepreneurship Council; and Jenell Ross, President, Bob Ross Auto Group.