Only 5% of PA's first small biz coronavirus loans went to non-white entrepreneurs - Technical.ly Philly

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Aug. 4, 2020 8:42 am

Only 5% of PA’s first small biz coronavirus loans went to non-white entrepreneurs

The March funding was spoken for in about six days.
Spinning Chairs barbershop in West Philly, the day before Pennsylvania’s green phase began.

Spinning Chairs barbershop in West Philly, the day before Pennsylvania's green phase began.

(Photo by Julie Zeglen)

In March, as it became clear the the coronavirus pandemic was going to hurt small businesses across Pennsylvania, Gov. Tom Wolf launched a $61 million fund¬†— the COVID-19 Working Capital Access Program — to dole out up to $100,000 to businesses with fewer than 100 employees.

It was one of a handful of relief options that have since been made available to Pennsylvania business owners: In June, for instance, Wolf announced $225 million in grants for for small businesses that were impacted by the public health crisis and subsequent business closure order. The federal government and the City of Philadelphia have offered relief programs in the form of grants and loans up to this point, but recovery for many businesses will be a long road — in June, the National Bureau of Economic Research officially dubbed the U.S.’s economic downturn a recession.

About four months after the initial three-year, interest-free loans were announced, only 41 of the 761 loans went to minority-owned businesses and the funding had run out in about six days, Spotlight PA reported this week. That’s about 5%, according to new numbers released by state economic development officials.

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Spotlight found that because business owners had to apply through a network of  local economic development nonprofits, it put some areas of the state at a disadvantage. For example, Philadelphia County only received $5 million across 57 loans, far fewer per capita than Luzern County, which received $4.4 million across 57 loans, but has a fraction of the population.

But funding from the state is still available. The COVID-19 Relief Pennsylvania Statewide Small Business Assistance program, is planning a second round of funds — grants ranging from $5,000 to $50,000 — and it’s first-come, first-served. The second round of funds is expected to open in August, the program’s site says.

At least half of the grants will be awarded to “historically disadvantaged businesses.” And unlike the March loans, this program “uses an automated scoring system that gives priority to low-income businesses owners, those in poor or rural areas, and the hardest-hit industries, as well as those who can show the greatest loss of revenue,” Spotlight reported.

State Sen. Vincent Hughes, who represents parts of Montgomery and Philadelphia counties, said back in June that the program “will provide welcomed relief for mom and pop businesses in neighborhoods across the commonwealth.”

“Since this pandemic began, we have heard the needs of the auto body shops, the barbershops, the beauticians, the pizza shop owners, the soul food establishments and other businesses in our communities,” he said.

More coronavirus relief funding is coming to the Philly area: PIDC is receiving $7.45 million offer gap financing to local small businesses in the form of revolving loan funds. Announced Monday, it comes by way of a CARES Act Recovery Assistance¬†grant from the U.S. Department of Commerce’s Economic Development Administration and is meant to benefit businesses that can’t otherwise access traditional bank financing.

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