What is the Color of Money?

Racial Discrimination in PPP Distribution

What is the color of money? Coins are silver, gold and bronze with paper denomination being green. But isn’t there another color missing from your answer? In March 2020 Congress approved the CARES Act which included the Paycheck Protection Program (PPP). This program is intended to provide loans to small businesses experiencing financial hardships due to COVID-19. But the legislation did not consider Black and brown entrepreneurs who, despite their best efforts, faced race and gender barriers denying them the opportunity to qualify for COVID-19 funding. The result is that several Black and brown businesses have closed or are on life support. Here’s what happened and the new changes in the law effective February 24, 2021.

Incarcerated Business Owners

Redlining and other racialized practices have historically barred communities of color from obtaining loans and the ability to build wealth. The original PPP legislation for small business did not do much to remove systemic barriers. For example, in the original legislation business owners with felony convictions were denied COVID-19 relief for their small business. If you owned a barbershop and had a felony on your record PPP funding was not an option. Not only that, but the rule appeared to be gender-biased affecting males in black communities in particular. Now, all small business owners with prior felony convictions are fully eligible to apply and should qualify for funding, as long as their prior felony conviction was not fraud related. What did you say the color of money was again?

Immigrant Business Owners

In the original PPP legislation small business owners who were Green Card Holders and not United States Citizens were ineligible to receive COVID-19 relief funding. Now, small business owners who are Green Card Holders can apply and qualify for PPP funding even without a social security number. They just need to use their Individual Taxpayer Identification Number (ITIN). While this change in the PPP laws is forward progress, it does not take into account at least another 500,000 undocumented small business owners who pay taxes. What did you say was the color of money?

Student Loans

In the original legislation small business owners who were delinquent on their student loans were denied access to COVID-19 relief funding. People of color were the group primarily struggling economically with student loan and debt repayment. This caused the PPP legislation to exclude them as business owners from emergency financial assistance. Therefore, minority owned businesses were more likely to fail during this pandemic from lack of resources. However, the changes in law made by the new administration effective February 24, 2021 now allow small business owners who are delinquent on their student loans to apply and quality for PPP funding. What’s the color of money?

Business Owner Without Payroll

The original PPP legislation made it difficult for business owners who did not have employees to apply and qualify for COVID-19 relief funding. Thanks to changes in the law effective February 24, 2021, solo entrepreneurs, self-employed, independent contractors or any business without employees can now expect more PPP support this round. In other words the loan amount should not only be based upon payroll but on the businesses over all loss of revenue year over year.

While these changes took effect February 24, 2021 they are particularly focused on small businesses with 20 or less employees for the next two weeks. These changes are only in effect for a few weeks and therefore it is imperative that you respond or apply immediately!

What’s the color of money? Here’s a possible answer. The PPP legislation approved $349 billion for small businesses of which at least $243.4 million went to publicly traded companies including $10 million to Shake Shack! The average loan was $206,000.00 according to the Small Business Administration. In other words, once again, Black and minority owned businesses were forced to close or remain on economic financial life support during this COVID-19 pandemic due to race, gender and other discriminatory barriers within the original PPP legislation. This shows that the color of money is always green. It always prioritizes the privileged over people. If you are a Black or minority business owner who never received PPP assistance due to some of these factors be sure to apply now.

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