Nneka Brown-Massey, Main Street Alliance Member from Tulsa, OK testified before the House Financial Services Subcommittee on National Security, International Development and Monetary Policy at a virtual hearing on “Supporting Small and Minority-Owned Businesses Through the Pandemic.”
Like many small businesses owners, I’ve struggled this past year. As a school supplies designer and manufacturer, moving schools to virtual learning meant my sales dropped more than 60 percent. But my struggle didn’t start with COVID, instead the pandemic has exacerbated many of the systemic barriers that I’ve encountered launching my business as a Black woman and service-disable veteran. That’s why I testified to the House Financial Services Committee last week - to highlight the opportunity we have to address small business challenges and priorities.
When relief programs opened last April following passage of the CARES Act, I immediately applied for both the PPP and EIDL small business support. However, after months of radio silence, I was finally told in June by a Small Business Administration (SBA) representative that I had been denied both for vague “credit reasons.” This was devastating not only for me and my family, but also for my employee I then had to lay off.
What my experience underscores are the very real barriers that exist when it comes to accessing capital and credit. As a person of color, living in a rural area, who wasn’t well connected to the banking industry, I should have known that my chances of securing financial support were already slim.
Part of the frustration of applying for the PPP was that I was forced to establish a new relationship with a new bank because the bank I previously worked with closed their only branch in my rural town, forcing me to drive nearly two hours to reach the next-closest location. I also had trouble with mountains of paperwork in the loan application process, due to concussion complications from airborne missions held inside the United States with the 82nd Airborne Division. As a result of injuries I sustained, my executive functioning skills impact the ability to manage and process large amounts of paperwork without disability accommodations or support.
I eventually had to make the difficult and life-changing decision to move from Columbus, GA to Tulsa, OK to take advantage of an incubator, the Tulsa Remote Program, and be closer to the services I needed to sustain my business.
A survey conducted last Fall by Main Street Alliance and Color of Change found that nearly half of Black owned businesses were saying they would have to close without additional support (compared to a third of businesses overall). Women-owned businesses had to wait longer, and in some cases were 10 times less likely to hear in a couple days from their lenders compared to their male counterparts. In that same survey, among small business owners who applied for any of the government aid programs, only 58% said they received the full amount they applied for, and Black men and women were twice as likely than that to not receive what they applied for. While waiting for economic assistance people of color and women owners were more likely across the board to reduce hours, pay, or make other financial sacrifices, like I have.
What would have helped me the most, and could still help me now, is a flexible, responsive, direct grants program. Even just a $5k-10k grant can change the course of my business and my life. The other needed support is technical assistance -- someone who can help me navigate programs I am unfamiliar with. I simply can’t afford an accountant or a lawyer on payroll who might offer expert advice and counsel.
I started my business with small loans through fintech providers, which I have paid back slowly and diligently as my sales came through -- though likely at much higher interest rates than from other lenders. There should be a thorough examination of SBA lending, technical assistance, and other programs to assess their effectiveness for supporting very small businesses, including minority-owned businesses, rural businesses, and other underserved Main Street businesses. Consumer protections should be expanded to small business borrowers, guaranteeing that: small business borrowers receive clear, accurate information that allows them to compare financial products; financial corporations cannot charge excessive interest rates and fees or engage in abusive debt collection practices; and, small business owners can retain personal assets while financing their businesses.
Lastly, Congress should consider a new public entity to dramatically expand access to capital for small businesses by better assessing small business needs, exploring alternate measures to credit history, and delivering support along with technical assistance on the scale they need.
Congress has an opportunity to make the most of this uniquely challenging yet historic moment to learn from the past and rethink entrepreneurship in this country. There are a number of lessons from 2020 and the uneven implementation of COVID relief programs for small businesses. My experience is one data point that could be built into a more intentional and systematic effort to collect quality disaggregated data about minority-owned small businesses.
What my experience shows is that Congress has the ability to make course corrections in the midst of this pandemic to build a resilient, flourishing small business economy.
Nneka Brown-Massey is the founder of Innovative Supplies Worldwide, Inc and a member of the Main Street Alliance