James Garrett Jr. runs an eight-person architectural firm with offices in St. Paul and New York. His firm has designed award-winning transit stations and public plazas, and the minority-owned business has turned a profit every year since the last recession.
But Garrett and his black partners at 4RM+ULA couldn't find a bank willing to loan them $80,000 through a $349 billion emergency loan program aimed at helping small businesses like theirs survive the downturn caused by the coronavirus.
"It felt like the bigger companies elbowed everybody else out of the way," Garrett said. "They got what they needed, and the money didn't really trickle down to the actual mom-and-pop businesses that don't have extensive banking relationships."
The U.S. House of Representatives on Thursday is expected to approve legislation that will steer at least $30 billion in new funding to community lenders that specialize in putting money in the hands of minority- and women-owned businesses. The money is part of a $484 billion coronavirus relief package expected to add $310 billion to the hugely popular Paycheck Protection Program, plus provide $75 billion for hospitals and $25 billion for national testing efforts.
The new funds will be welcomed by thousands of small-business owners like Garrett whose applications stalled when the emergency loan program ran out of money last week, 13 days after it launched April 3. This time, however, business owners should see more options when it comes to finding a lender to help them.
Besides applying at a big bank, as most companies did in the first round, small-business owners also will be able to obtain a forgivable loan of up to $10 million from more than 1,000 so-called Community Development Financial Institutions in the U.S. There are dozens of CDFIs in Minnesota, including the Community Reinvestment Fund, WomenVenture and the Metropolitan Economic Development Association (MEDA).
Though more than 5,000 financial institutions are expected to participate in the second round of funding, political leaders said the pool needed expanding.
"I believe every member of our caucus heard from businesses in their states who couldn't access [the program] because they didn't have a prior relationship with a big bank," Senate Democratic leader Chuck Schumer said Tuesday during debate on the measure, which passed unanimously.