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Minority Businesses Locked Out of Stimulus Loans

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Loans handed out to struggling small businesses as part of President Barack Obama’s stimulus package have largely shut out minority businesses—especially those owned by Blacks and Latinos—according to data provided by the federal government’s Small Business Administration (SBA) to New America Media (NAM).

On June 15, the SBA, using money from the $787 billion American Recovery and Reinvestment Act, launched the ARC program, America’s Recovery Capital, giving banks and credit unions 100 percent guarantees so they’re taking no risk when they make loans of up to $35,000 to previously successful , currently struggling small businesses to help them ride out the recession.

Under the program, the borrower pays no interest and makes no payments for 12 months, then has five years to repay the loan. SBA charges no fees and pays interest to the lender at prime – the rate of interest at which banks lend to favored customers – plus 2 percent. The Obama Administration does not report the racial breakdown of who’s benefiting from these loans at Recovery.gov, but data obtained by NAM from the SBA found that of the 4,497 ARC loans where the race of the borrower was reported, 4,104 (over 91 percent) went to white-owned firms, 140, (3%) went to Hispanic-owned businesses, and 151 (3%) went to Asian- or Pacific Islander-owned businesses. Only 65, (1.5%) went to Black-owned firms.

Overall, White-owned businesses received over $130 million in loans through the program, while Hispanic-owned businesses got $4 million and Black-owned businesses less than $2 million. In five states – Alabama, Arkansas, New Hampshire, South Dakota, and Wyoming—every single firm that received an ARC loan was white-owned. In eight other states, including Louisiana and Nevada, all but one loan went to a whiteowned firm.

Civil rights groups and representatives of the minority business communities reacted with anger when told of NAM’s findings.

“It’s just horrendous,” said Anthony Robinson, director of the Washington, D.C.-based Minority Business Legal Defense and Education Fund (MBELDEF).

“During this economic recession, there is no recognition or sensitivity to the need to support and benefit people of color.”

“The data raises troubling questions” and should trigger an investigation,” says Oren Sellstrom of San Francisco’s Lawyers Committee for Civil Rights. “This should be a red flag for the SBA and the banks. It gives us the indication that something may be amiss and further explanation is warranted.”

Census figures put Black business ownership at 5% and Hispanic business ownership at about 7% -- more than double the numbers getting these SBA-backed loans.

At the SBA in Washington, spokesman Jonathan Swain argued racial disparities in the ARC loan program don’t paint the full picture of the agency’s lending practices. Many of the SBA’s other loan products, he says, have large minority business participation.

For example, he says, minority-owned businesses receive 29% of loans given through the SBA’s regular

lending program and 37% of Microloans doled out by the agency.

“It’s hard to look at the ARC program by itself,” he told NAM. “It’s just one tool in the tool box, just one tool in the array to help small business in these tough economic times.”

One reason for the extremely low level of minority participation in the ARC loan program, he maintains, is that the Recovery Act specifically prohibits the agency from allowing an ARC loan to be used to refinance a regular SBA loan, which minority firms are more likely to have.

That explanation isn’t enough for minority business and civil rights groups, however. Sellstrom of the Lawyers Committee for Civil Rights isn’t convinced by that argument. “You would think that minority owned firms could use $35,000 for a lot of uses other than paying down SBA loans.”

Sellstom said SBA’s response only underscores the need for further investigation. “It’s often the case that the first explanation leads to further questions,” he said. Javier Palomarez, the president and chief executive officer of the United States Hispanic Chamber of Commerce, says the ARC loan program was poorly designed and “destined to fail.”

When Congress was drafting the stimulus package, Palomarez said, his agency and other minority business groups argued the severity of America’s recession should have led to the government handing out loans to struggling small businesses directly – rather than simply backing up loans from the very banks that caused the country’s economic recession.

But the SBA and the banks lobbied against direct government financing of small business, he said, and so Congress devised a $35,000 loan program that requires a small business to wade through nearly the same paperwork needed to obtain one of SBA’s regular $2 million loans.

Because of the paperwork and the small sums involved, “most banks don’t want to participate in the loan program, and many of those that are participating are restricting applications only to long-term clients.”

And those long-term clients often exclude small, minority businesses, which banks see as “risky.” “There’s been a dramatic rise in the risk profile of small businesses,” Palomarez said “and that is even more pronounced among minority entrepreneurs.

“African American and Hispanic entrepreneurs often self-financed their start-ups or expansions, meaning, that they tapped into their own net worth … taking out home equity loans or second mortgages to invest in their communities and create jobs.”

“These businesses did not get a bailout and, while the Administration has been generous with tax credits for struggling businesses, the banks that caused this problem are nowhere to be seen,” he said. James Ballentine, senior vice president of the American Bankers Association, told New America Media the banks have nothing to do with the racial disparities apparent in the stimulus’ small business loans.

“When somebody comes to us, we don’t look at their race,” he said. “The can be red, white, brown, or green. The only thing we look at is their credit worthiness.”

The main problem, Balletine, said, is “there’s been a real lack of marketing and as a result, very few lenders have participated.” He noted that in the six months since the ARC Loan program was first announced, the SBA has been able to underwrite fewer than 5,000 loans.

But Sellstrom of the Lawyers Committee says the bankers’ analysis doesn’t address the question of the racial inequities. The fact that there’s been little marketing doesn’t mean that nobody is being told about the opportunities. It just means that it’s going on in less formal ways, and those informal channels are the ones that minority businesses are not privy to.”

“The breakdown is that people of color are not present at the banks,” added Anthony Robinson of MBELDEF.” And the government that’s pushing these benefits through are not sensitive to the fact that we are not involved in this distribution network.

“So to solve this problem we need to incorporate people of color into the distribution chain of banks, business, and government. Otherwise, the flaws of the system will only magnify the inequality that’s at the center of our recession.

 

H1N1 Flu Vaccine Open To Anyone In San Bernardino County

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By Chris Levister –

The 2009 H1N1 influenza vaccine is now available to anyone who wants it in San Bernardino County. San Bernardino County Health Officer, Maxwell Ohikhuare stated that the delivery of local vaccine supplies has increased enough to remove the restriction to priority groups. “The H1N1 virus has been widespread in the county, the state of California and throughout the country, so I urge people to protect themselves by getting vaccinated.”

People can walk in at the SB County Public Health Clinic to get the vaccine without an appointment:

351 North Mt. Vernon Avenue, Room 102 Appointments are required at the Barstow, Ontario, Redlands and Hesperia Public Health Clinics to receive the H1N1 vaccine.

To make an appointment, call 1 (800) 722 - 4777.

Many School Districts in the County are also providing the vaccine to their local communities.

For schedules, contact the local School District Office, or go to the Superintendent of Schools website at http://www.sbcss.k12.ca.us/.

The H1N1 flu vaccine will not be provided at the following Public Health Clinics:

Big Bear, Fontana, Joshua Tree, San Bernardino (799 Rialto Avenue)

 

African-American Publishers ask Bailed-out Companies for Reciprocity

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NNPA Targets General Motors and others for Lack of Spending in Black Community

African Americans represent a buying power of $913 billion annually, 62 percent of total consumer buying power. However, the very corporations and institutions they support do not believe in reciprocity. Danny Bakewell, newly-elected chairman of the National Newspaper Publishers Association (NNPA) which represents 200 black community newspapers, today announced that his organization would be addressing the disparities between the revenue large corporations generate from black consumers, compared to the advertising invested in black-owned media. NNPA is particularly interested in corporations such as General Motors (GM), who received $50 billion dollars in federal bailout money this year.

The 10 Congressional Black Caucus Members of Congress who sit on the House Financial Services Committee are, from left, Rep. Emanuel Cleaver II (Mo.), Rep. Gwen Moore (Wis.), Rep. Mel Watt (N.C.), Rep. Al Green (Texas), Rep. Andre Carson (Ind.), Rep. Maxine Waters (Calif.), Rep. David Scott (Ga.), Rep. Gregory Meeks (N.Y.), Rep. Keith Ellison (Minn.), and Rep. William Lacy Clay, Jr. (Mo.).In October, the National Alliance of Market Developers and Target Market News produced a study for the NNPA that showed African-American consumers will spend $2.8 billion on new GM cars in this year alone, representing nearly twenty-five percent of GM’s market shares. GM is one of the top five advertisers in the world yet the corporation spent only $29.9 million on advertising in Black media in 2008. This figure represents a meager 2.4 percent of GM’s $3 billion advertising and marketing budget.

This is just one example of government bailed-out institutions taking advantage of black tax payers. Bank of America and Wells Fargo are two others.

“This is not only unjust; this is tantamount to a crime. Companies are happily taking money out of the black community but not investing back,” says Bakewell. “African-American media companies are small businesses and declining advertising revenue has forced many to lay off employees and, in some cases, close their doors. And we know how desperate our community is for jobs.”

The Congressional Black Caucus Financial Services Committee Members have also released a statement (Dec. 2) acknowledging the extreme economic crisis in the African–American community, and in particular the decline of minority-owned small businesses. In the past decade there has been a 40 percent reduction in the number of African-American-owned media outlets. Civil Rights leaders including the Rev. Jesse L. Jackson, Sr. and Marc Morial, president of the National Urban League, have pledged to work with NNPA to apply pressure on those institutions.

“Now that the government has stepped in, the Obama administration must enforce the laws of equal opportunity, contract compliance and fairness. These are government-run companies. And this is an imperative,” said Rev. Jackson. “These institutions simply cannot continue to take African Americans and this country’s small businesses for granted.”

“I am making this my top issue as chairman of NNPA,” said Bakewell. “We need real change and fast action now. Even if we have to take our 200-plus publishers to the board meetings of every corporation who is guilty, we will. This is an unethical and immoral public issue.”

 

Kaiser's Black Professionals Honor Students

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By BVN Staff –

37-year Kaiser employee EVS Supervisor Gloria A. Hutchins with Bernard Tyson.Kaiser Permanente African American Professionals Association recently held their 10th annual scholarship awards banquet themed “It Takes A Village to Raise a Child” at the Sheraton Fairplex in Pomona.

During the banquet, keynote speaker Bernard Tyson, Executive Vice President, Health Plan and Hospital Operations, Chairman of the Board of Kaiser Foundation and key principle behind Kaiser Permanente’s “Thrive” campaign spoke to the scholarship students, encouraging them to own their world. He admonished the students that “when you own your world, you do whatever you want to do. To the scholarship students, ‘own your world.”

This year’s scholarship recipients were: John H. Clark, III, Ariel Hudgens, Tristan Lovell, Nedra Chijioke, Martice Brumfield, Hope Miller, Apostle Alicia Norton, and Ashleigh Clark.

 

ACLU Lawsuit: Joint Barber Raids Recurring Practice

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By Chris Levister –

Attorneys representing a group of Moreno Valley barbers raided by police and state Board of Barbering & Cosmetology (BBC) agents in 2008 say the practice of local law enforcement using state agents to conduct intrusive and unjustifiable searches that skirt the Constitution is not isolated to the Riverside County enclave.

“During the course of this litigation, we discovered that these joint actions happen across the state,” said American Civil Liberties Union of Southern California attorney Peter Bibring, who filed the case along with the Los Angeles law firm Seyfarth Shaw. “It’s clear that police departments have repeatedly worked with board inspectors presumably as a way to skirt getting a warrant.” said Bibring in announcing a partial settlement in the civil rights lawsuit filed by the ACLU in April. “This agreement stops that practice.”

The lawsuit alleges that a group of Black barbers and their patrons were targets of racial profiling when five or six police officers wearing body armor and carrying guns rushed through the businesses under the pretense that they were conducting health and safety inspections. The case watched closely by Constitution experts is the first to challenge how the state board conducts joint inspections with outside law enforcement agencies.

The settlement requires the board to adopt stringent new rules against discrimination and limit joint inspections with local police.

The BBC thinks the agreement is “fair and a good thing,” said Luis Farias, the director of communications for the state Department of Consumer Affairs, which oversees the board.

Farias said it is routine for police to assist state inspectors, but denied inspectors were serving as proxies of local police. Officials at the state admitted no wrong doing but said they are improving inspection practices.

“I think the settlement is a matter of clarifying things and now it’s clear,” said Farias.

The City of Moreno Valley, its Police Department – whose services are contracted from the Riverside Sheriff’s Department and Sheriff Stanley Sniff were also named in the federal case.

Plaintiff’s attorneys Bibring and Rishi Puri of Seyfarth Shaw stressed that the BBC agreement is a partial settlement. The complaint is seeking monetary damages and similar anti-discrimination protections from the City of Moreno Valley.

“This is a problem one sees across the country—the use of these joint inspections for doing what really amounts to drug sweeps,” said Jamie S. an Oakland barber and retired attorney.

“I think the way they are using state inspectors is unconstitutional.

I think it’s just a way to get around the Fourth Amendment,” he said. “People cited with so called business code violations are compelled to give the city inspector or police officer personal data that is entered into the police department computer base and used for routine criminal investigations. The personal information includes race, marital status, birthdates, home and work telephone numbers, criminal history and even a description of scars and tattoos. Sometimes police simply walk in, explains Atlanta barber Wesley Dennison.

Dennison was standing in his break room in August when he heard a noise at 7:00 am and found a police officer standing in his shop. “I wanted to know who walked in without permission,” he said. “The officer didn’t answer me. He just started walking through the place.”

He said such overly aggressive enforcement of city codes might violate the Fourth Amendment, which guards against unlawful search and seizure.

“If inspectors or police suspect you of something, then they can go to a judge and get an affidavit and then get a search warrant.” Dennison says barbers around the country are watching this case.

“There is a prevailing belief among many of us that what happens in California sets the bar for other states.”

The Moreno Valley Police Department and the city have denied any racial profiling, saying a wide variety of barbershops were raided that week, not just those owned by African-Americans.

They say the raids were prompted by complaints that some barbers were working without licenses and that enforcement of business licenses and building codes is crucial to public safety and help prevent unsanitary and unsafe conditions. “Local municipalities and police departments often adopt their own interpretation of search and seizure laws, and those interpretations are allowed to stand because no one challenges them,” explains Chicago employment and human rights expert Leah Mitka.

“You do need a test case to bring clarity to these things,” Mitka said.

“There’s a huge degree of intimidation at play here. It’s like when you get stopped by a cop, you say ‘yes, sir’ even though you haven’t uttered those words since you were in trouble with your dad or the principal when you were in high school,” she said. “When police show up, people often panic and agree to just about anything.”

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