Latest Federal Relief for Minority-Owned Small Businesses and Others That Have Missed | Economic news


The $ 1.9 trillion federal stimulus package passed earlier this month has less money for businesses than in previous rounds of relief. But the funding is intended for hard-hit small businesses that are minority-owned or in the hospitality industry, making it a key lifeline in the New Orleans area.

The US bailout, signed by President Joe Biden on March 11, includes around $ 50 billion that specifically targets bars, restaurants, closed performance venues, and businesses in low-income communities, where businesses owned by blacks and women predominate.

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The package extends two small business administration programs that have been the main lifelines for businesses during the pandemic: the Paycheck Protection Program and the Economic Disaster Loan Program.

The PPP received an additional $ 7.25 billion, a relatively small amount compared to the nearly $ 1,000 billion provisioned in the previous three cycles last year. But the program still has about $ 88 billion remaining from previous packages. And on Tuesday, Biden enacted an extension of the program until the end of May.

The Disaster Loan Program, or EIDL, was supplemented with an additional $ 15 billion and in this program priority was given to small businesses – those with fewer than 300 employees – located in low-income communities that suffered an economic loss of more than 30%. A third of these funds are reserved for companies with ten employees or less that have suffered an economic impact of at least 50%.

There is also $ 175 million in business grants available as part of a pilot program for underserved and underbanked communities, and the SBA has an interactive map that shows which areas are considered low income. Dozens of census tracts in the New Orleans metropolitan area are eligible.

The targeting of these funds is intended to compensate for the fact that many small minority-owned businesses found themselves at the back of the pack in the first rounds of relief, as better-resourced businesses moved faster. A report by the SBA inspector general after the first PPP round found that up to 90% of minority and rural businesses have been left behind.

Iam Tucker, who runs a New Orleans-based civil engineering company, said it was frustrating last year to see companies that seemed less in need gobble up, in two weeks, the entire first round of PPP of 349 billion dollars.

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“What was terrible to see is that the big companies were getting a million, two million. I’m fighting for $ 350,000 and I see people who don’t need it, companies who have reserves of money. multi-million cash, get more than you, ”Tucker said. , a former Baton Rouge police officer who took over the management of his father’s business 12 years ago.

She was successful in securing funding from the EIDL and PPP programs when they were subsequently completed at the end of last spring. But she was even more frustrated in December when the $ 284 billion PPP cycle was prioritized through March 9 for companies with 20 or fewer employees.

It employs 30 people and was not eligible, even though, as a 100% black and female owned business, ILSI Engineering is considered a “disadvantaged small business” under the SBA.

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“The sweet spot is never where I am,” said Tucker, who also noted that her company, which oversees road construction and other infrastructure projects, has had to wait longer to get paid. over the past year because local government agencies have run out of taxpayer dollars.

Few sectors have been hit as hard as the hospitality industry, and more than half of the latest small business package – $ 28.6 billion – has been earmarked specifically for qualifying bars and restaurants. To be eligible for a grant of up to $ 10 million, applicants must have no more than 20 outlets and companies cannot be publicly traded. Additionally, the fund’s $ 5 billion is reserved for owners who brought in $ 500,000 or less in 2019.

Tina Welty chats with a customer over lunch at Welty’s Deli, her restaurant in downtown New Orleans. Business has dropped dramatically during the pandemic, but it is finding new ways to survive.

The priority given to small operators, which has been praised by local owners, is to avoid the situation seen in the first rounds of last year, when some large chains and franchise operators won the lion’s share of the subsidies. Some were embarrassed enough to return the funds.

Other rules for the new Restaurant Revitalization Fund include prioritizing outlets owned by women, military veterans and those who meet “socially and economically disadvantaged” criteria.

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GNO Inc., the regional economic development agency, has scheduled a webinar on Wednesday, March 31 to help guide restaurateurs, bar owners, food truck operators and others who qualify under the rules and regulations. application procedure for new grants.

The bailout also complements the Shuttered Venue Operators Grant, which was in the December stimulus package, by $ 1.25 billion to bring it to $ 16 billion.

The Small Business Administration said it plans to open applications in April and has a webpage that outlines the eligibility criteria and the order of priority for awarding the grants, which will start with those who have lost. at least 90% of their activity.

Michael Hecht, CEO of regional economic development agency GNO Inc., said that although it is difficult to quantify, anecdotal evidence and data such as parish tax returns show that probably around a fifth of companies regions did not survive the pandemic.

According to studies by the National Bureau of Economic Research, a think tank, black people and other minority business owners and employees have suffered disproportionately over the past year. NBER data shows African-American-owned businesses failed at an astonishing rate in the early months of the pandemic, with a 41% drop in active businesses nationwide from February through April. last year.

They were also the least likely to rebound in the following months, with active businesses still down 20% in June.

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This is in part due to the type of businesses in which minority owners and employees tend to be engaged, including hospitality and other service industries.

The point is corroborated by the unemployment figures for the metropolitan area. Even though it has halved since April last year, the unemployment rate was still 9.1% in January, three percentage points above the national average, according to the Bureau of Labor Statistics.

Additionally, when you factor in the 20,000 people who have left the workforce and are no longer considered unemployed, there are about 70,000 fewer people working in the New Orleans metropolitan area than ‘before the pandemic.

“It has been a difficult year and a lot of people are suffering tremendously,” said Quentin Messer, CEO of the New Orleans Business Alliance, the city’s economic development agency. He said it is likely that New Orleans will take longer to recover than cities like Austin or Nashville, given the hotel industry’s disproportionate reliance on conventions and cruise ships, which are expected. take years to recover.

The digging will depend as much on how the local government spends its bailout money, including the $ 375 million en route to the city of New Orleans, as it is on funds for small businesses, Messer said. The city and NOLABA should publish a priority plan in the coming days.

Lacy Davillier, owner of Davillier Photography & Graphics

Lacy Davillier, co-owner of Davillier Photography & Graphics, said relief from the relaunch has helped her move on and keep staff employed, but she and her partners are still “a hundred thousand dollars in the hole.”

Lacy Davillier, who owns Davillier Photography & Design with her sister, Kari Baltimore, estimates that even with the federal help they received from the last round of PPP last year, she will still be around $ 100,000 in the hole.

His company specializes in helping businesses market themselves, and Davillier said his survival is tied to how other small businesses in New Orleans are doing.

“Things are getting better, a lot better,” Davillier said. “But I’m still catching up.”

Chris Ferris, CEO of Fidelity Bank, which counts Davillier’s company among the more than 3,000 SBA loans his bank has secured over the past year, said the process has become much less frantic than it has ever been. ‘was in the first few months.

But he said there are still many potential pitfalls around loan cancellation terms, tax treatment, how businesses should document and justify how they spent the money. He also fears that some companies still fail to do so, despite all federal help.

Credit quality remains strong at this time,” said Ferris. “But once the stimulus and payment support are gone, that’s when you start to see if these businesses can be viable in the new environment.”

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