Minority-owned small businesses have been disproportionately affected by COVID-19. Minority-owned businesses are more likely than non-minority-owned businesses to have trouble getting loans, voice fears of permanently closing, and forecast decreased revenues in the following year.
Michael Pugh is the president and CEO of Carver Federal Savings Bank, a 72-year-old Black-owned banking organization. It is one of the nation’s largest African American-managed and publicly traded institutions. The Carver Bank is located in Harlem but also has branches in Brooklyn and Queens.
“And so what we saw and the data tells us is that more than 41% of these Black and Brown small businesses either closed their doors or will be closing their doors because they will not be able to recover from the debt and the loss of income associated with the pandemic. And so when you think about the dramatic impact of small businesses that have gone under because of a global issue that changed the lives of us all, we know that what these businesses will need is capital to help recover and to try and get back on their feet,” said Pugh.
Banks such as Carver have been able to acquire money through the Rapid Response Program in order to support small businesses and general demand in the areas they serve. Through this program, financial institutions that are certified CDFI, which stands for community development financial institutions and is a U.S. Treasury designation, will be able to use this capital to support community development, which plays an important economic role in many cases.
The Greater Chamber of Harlem Commerce has teamed up with Carver Bank to help small businesses, non-profits, and cultural organizations who have been turned down by big banking institutions by directing them to Carver federal savings banks. The Greater Chamber of Harlem Commerce has referred those in need of financial assistance to Carver Federal Savings Bank in the hopes of establishing a relationship with the bank that would allow business owners to receive more attention to their needs.
“It is now dramatically well known that the COVID pandemic has devastated the small businesses in particular, and the not-for-profit, cultural and educational ordinate and health organizations and communities of color throughout the nation and beyond. As it relates to New York City, it is conservatively estimated that 43% of all of the small businesses in New York City that were impacted by the COVID pandemic will not reopen. And so that will bring a devastating impact on the small business sector, on employment in our communities and on services provided by the small business sector to their service area,” said Lloyd Williams, president of the greater Harlem Chamber of Commerce.
Since many businesses of color, particularly Black and Brown businesses, do not establish strong and meaningful relationships with financial institutions, and because of the nature of small businesses, it is more difficult for them to receive loans or PPP grants, according to Williams. Many of them lack the support infrastructure of accountants, CPAs, and attorneys who can assist them in applying for government financing and obtaining funding from financial institutions.
Carver Bank had been committed to providing COVID relief for small minority business owners. Through the Paycheck Protection Program they have worked very closely with women and minority entrepreneurs for programs; they have a partnership with the MTA that has enabled them to provide more than $23 million in access to capital to women and minority entrepreneurs who are looking to participate in big contracts with the MTA .The program has allowed many minority contractors and small businesses that would not have qualified for MTA projects, because of lack of capital, to have access to capital and to participate.
Carver Bank is also in the process of developing a micro small business loan program that will evaluate and support small businesses without complete reliance on traditional credit scoring.
Many of Carver Bank’s newest clients have come to them as a result of their prompt response and assistance, as well as their patience in walking them through the process of applying for the different programs and stimulus measures that were available. Carver Bank is also very accessible in minority communities within Manhattan, Queens and Brooklyn.
“When we think about organizations like Dream Academy that is located in East Harlem charter school, being able to provide support to them through the paycheck Protection Program, participating in the preservation of a significant number of jobs because the charter school makes a tremendous impact on the Upper Manhattan, East Harlem communities. Along the Malcolm X corridor and the Frederick Douglass corridor, I would say that there are many businesses Carver Federal Savings Bank is proud to say are customers and have been our customers for a lot of years,” Pugh expressed.