Of the 1,300 Paycheck Protection Program loans that Southern Bancorp made last year, many went to customers who had been turned away by larger banks, Mr. Williams said.
In a recent Federal Reserve survey, nearly 80 percent of small-business owners who are Black or of Asian descent said their companies were in weak financial shape, compared with 54 percent of white business owners. And Black owners face unique challenges. While owners from all other demographics told the Fed that their main problem at the moment was low customer demand, Black respondents cited a different top challenge: access to credit.
When Jenell Ross, who runs an auto dealership in Ohio, sought a Paycheck Protection Program loan, her longtime bank told her to look elsewhere — a message that large banks like Bank of America, Citi, JPMorgan Chase and Wells Fargo delivered to many of their customers in the program’s frenzied early days.
Days later, she obtained a loan from Huntington Bank, a regional lender, but the experience stung.
“Historically, access to capital has been the leading concern of women- and minority-owned businesses to survive, and during this pandemic it has been no different,” Ms. Ross, who is Black, told a House committee last year.
Community groups step in
Community lenders and aid organizations took a shoe-leather approach to filling the gaps.
Last year, the American Business Immigration Coalition, an advocacy group, worked with local nonprofits to create a “community navigator” program that sent outreach workers to Black, minority and rural businesses in Florida, Illinois, South Carolina and Texas. They plowed through roadblocks, Whac-a-Mole-style.
Language barriers were common. Many business owners had never sought a bank loan before. Several didn’t have an email address and needed help creating one. Some hadn’t filed taxes; the coalition hired two accountants to help people sort out their financials.
“Our folks literally went door to door and walked people through the process,” said Rebecca Shi, the group’s executive director. “It’s time-consuming.”