Policy Agenda for COVID-19 Recovery

The country’s small businesses are facing unprecedented challenges and devastation. Analysis of the Current Population Survey found that over the two-month window from February to April 2020, “the number of active business owners in the United States plummeted by 3.3 million or 22
percent …The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses.” The recent rise in COVID-19 cases warns of continued harm.

A deeper dive into the data shows that the pain has not been equal across the board. The drop in the number of business owners are as follows:

  • African-American business owners dropped by 41 percent.
  • Immigrant business owners dropped by 36 percent.
  • Latinx business owners dropped by 32 percent.
  • Asian business owners dropped by 26 percent.
  • Female business owners dropped by 25 percent.
  • White business owners dropped by 17 percent.

Again, African-Americans end up suffering the most, with other minority communities coming in a close second.

If small businesses are the canaries in the coal mine when it comes to the economy, then the plight of African American small businesses shows the state of the American soul. If the state and country are going to weather this crisis to the best of our ability, that means investing in small businesses is a priority; and investing in African-American businesses is an imperative.

We need to recognize that inequality is rife in our system, and that system has produced the reality and needs fundamental structural change. Society as a whole must alter the baked in racism and unrig the system. We need new rules that promulgate equity, and not systematically perpetuate an unequal society. This is the long-view and CAMEO will work toward that path.

Simultaneously, we recognize that policy decisions are being made in the here and now and we must respond appropriately to that reality.

Responding to COVID-19, most efforts thus far have been focused on immediate relief.

On the federal level, programs included in the relief bills such as the PPP loans and EIDL loans will help some businesses. However, money is not reaching those who are in most need in the implementation of those programs. A Goldman Sachs report found that

79% of Black business owners applied for a PPP loan, compared with 91% of small businesses overall;
● 40% of Black business owners have been approved for a PPP compared to 52% overall; and
● 26% of black business owners have less than one month of cash reserves compared with 17% overall.

In the first round of PPP loans, according to SBA data, less than 3% of all small businesses and sole proprietors in California received PPP loans. The second round went far better for our small businesses as 70% of the loans were less than $50,000. CAMEO is committed to advocating for resources to these communities that have been left out – especially black-owned businesses that historically have not had good relationships with banks – as well as ITIN holders and other micro-businesses. At the federal level that means supporting grant funding for small businesses, responsible business lending, and liquidity for CDFIs.

On the more local level, some efforts have been launched. They include California’s $100 million loan guarantee funding, local public emergency funds, and private emergency loans such as Verizon/LISC, FB, Salesforce grants, among others. The California FY 20-21 budget contains several provisions that will help small business that CAMEO supports, including: maintaining funding for the Technical Assistance Expansion Program and Capital Infusion Program funding; more money for the IBank to help with small business lending, waiving of the $800 minimum franchise tax fee, and $10 million for a fund to help start-up entrepreneurs regardless of immigrant status or English proficiency.