Give Minority-Owned Businesses Better Access To Capital

This pandemic has put a magnifying glass on the inadequacies that lay at the heart of our economy. We have an obligation to fix them.

Sen. Kirsten Gillibrand
5 min readSep 10, 2020

From the moment it was rolled out, it was clear that the Paycheck Protection Program (PPP) was not working for everyone. As time went on, it became clear exactly who it wasn’t working for.

This pandemic has put a magnifying glass on the inadequacies that lay at the heart of our economy. We give too much emphasis and public investment to big corporations, Wall Street, and individuals with the wealth and connections to make the system work for them. From the big business paid leave loophole, to tax breaks for the very wealthy in a relief package, to the PPP, the government’s COVID response has failed to put first those who need help most.

We need to reverse generations of underinvestment and outright discrimination in minority communities and we should start with the core of those communities and the engine of our economy: small businesses. We should direct future PPP funding primarily through community oriented lending institutions. We should set aside more funding for direct lending, giving these business additional rounds of help. And, we should hold accountable not only the big banks and corporations, but the whole system of federal contracts, relationships, and technical expertise investments.

For many small businesses, especially minority-owned businesses, getting relief through the PPP hasn’t been an option. Minority business owners often didn’t have the so-called right relationships with the so-called right banks, and were left out and left behind. We made some progress in the interim relief package, which included more money and new rules to reach underserved communities, but we must do much more.

Even before the pandemic, it was incredibly difficult for minority business owners and entrepreneurs to access capital. The Federal Reserve reported that although Black-owned firms were the most likely to have applied for bank financing, less than 47% of their applications were fully funded. Another study from the Stanford Institute for Economic Policy Research found that white business owners were seven times more likely to get a bank loan during their first year of business than Black business owners.

The way the PPP was structured only further magnified the issues endemic to our financial sector and widened the gap in access to capital. The New York Times reported that during the first phase of PPP, when competition for aid was at its peak, 75% of the loans went to businesses in areas where the majority of residents were white. In May, a survey of black and Latino business owners who applied for PPP loans found that just 12% had received what they asked for and nearly half predicted that they would be forced to close their doors for good in the near future.

Additionally, a recent study that sent Black and white “mystery shoppers” to apply for PPP loans at branches of 17 banks found that Black borrowers were routinely offered different products and treated worse than the white borrowers, even though the Black borrowers had slightly better financial profiles than their white counterparts.

In New York City, Black people make up 22% of the population, but just 2.1% of businesses are Black-owned. And the number of Hispanic-owned businesses in the city was declining even before the pandemic. We cannot afford for minority-owned businesses to become a casualty of COVID.

When I met with the Minority Merchants Council, I heard directly from several business owners who had to wait months to receive their loans or never received them at all. They were worried not only about their companies’ ability to survive, but about the impact this crisis will have on minority-owned businesses across the city and the communities that rely on them.

This pandemic has hit communities of color extremely hard. Compared to white residents, Latino and Black residents of the United States have been three times as likely to contract COVID-19, and twice as likely to die from the virus.

It will take a long time for these communities to recover and to start supporting local businesses again. But those businesses may not be able to wait that long.

We must address the issues of capital access for minority owned businesses, especially with regard to bank lending from the PPP or other follow-on programs. One way we can do that is by providing capital and support through community-focused lenders, who facilitate more lending to small businesses in communities of color. Those lenders have largely been left out of the PPP; less than 10% of Community Development Financial Institutions (CDFIs) were able to participate. That’s why I joined my colleagues in sending a letter to Senator Schumer and Senator McConnell calling for additional funding for CDFIs to be included in the next relief package. I also recently pushed for a $2 billion CDFI crisis fund, which would automatically provide funding to heavily impacted communities during a natural disaster or economic crisis, including a pandemic.

I support Senator Schumer’s plan to provide $20 billion of capital and support for small and minority-owned businesses. It would invest in those community-focused lenders and permanently authorize and expand programs offered by the Minority Business Development Agency and the Small Business Administration, including the 7(a) Community Advantage and the PRIME programs. It would also address the capital gap by providing tax incentives to new small businesses to help offset some of the costs of launching a company.

I’m also supporting policies like the RESTART Act, which would provide aid to businesses like restaurants, theaters and live event spaces that can’t operate at full capacity, and the Saving Our Street Act, which would establish a $125 billion fund to aid our smallest businesses, especially historically underrepresented businesses, including minority- and women-owned businesses.

Finally, we should make sure that the vast technical resources of the federal government, and the financial system at large, are easily accessible. This includes strengthening the Community Reinvestment Act and leveraging the Federal Reserve’s branch system to provide technical help to lenders and businesses in minority communities. I also recently introduced new legislation with Senator Warren to require the Federal Reserve to use its existing authorities to close racial employment and wage gaps and report on how those gaps change over time.

Minority-owned businesses are an important part of our communities, and our economy, and we must take action to make sure they survive this pandemic.



Sen. Kirsten Gillibrand

United States Senator for New York. Official Senate Medium account.