Minority-owned businesses can now get a financial boost with COVID-19 funding.
Wisconsin’s governor, Tony Evers, has launched an initiative to help 1,000 “ethnically-diverse micro-businesses” that have been affected by the COVID-19 pandemic. This will come in the form of a $2 million grant.
The Ethnic Minority Emergency Grant, which was funded by the Wisconsin Development Corp., is offering $2,000 to small businesses that are based in Wisconsin and are in the retail, hospitality, or service industry. They have to be at least 51% minority-owned to qualify.
More Requirements To Qualify
In order to qualify for these funds, these businesses must have no more than five employees working full-time, including the owner. They must have started before January 1st and in operation up until February 29th of this year. Also, they must not have obtained any federal funding from the Small Business Administration’s Paycheck Protection Program or even state aid via the Small Business 20/20 program.
Governor Tony Evers states:
“Small businesses in our minority communities face special challenges. Many have not received federal or state assistance yet because they are unbanked or don’t have the relationships to financial institutions that other businesses do. Yet these micro-businesses are often the heart and soul of their communities and an important pathway for minority entrepreneurs.”
Most Minority-Owned Business Owners Lack Strong Relationships With Banks
The launch of this assistance program comes several weeks after the conclusion of the Paycheck Protection Program as well as other federal relief programs and initiatives. These programs drew criticism as it was discovered that minority-owned businesses were mostly left out. A survey that was conducted by a national consulting firm reported that only 12 percent of minority business owners who submitted an application for the Federal Paycheck Protection Program actually received the financing they requested.
The main reason that few businesses and even fewer minority-owned businesses received federal grants was because the program was designed so that the majority of loans were funneled to businesses that have “existing strong relationships with banks”.
According to Stacey Johnson, a regional director of WEDC, she said:
“Banks worked with their own customers first. If you didn’t have a banking relationship, those funds were extremely difficult if not impossible to get your hands on.”
Other small business owners were overlooked, including those in the rural areas. A report from the Small Business Administration’s inspector general indicated that the agency did not offer guidance to lenders about the importance of giving priority to borrowers located in “underserved and rural markets”.
Furthermore, the report also pointed out that borrowers such as rural, minority-owned, and women-owned businesses did not get the funds they needed.
Businesses Still Struggling
During Wisconsin’s stay at home order, many retail stores, restaurants, and other businesses have suffered tremendous losses due to closures since COVID-19. Businesses may also have to face new expenses upon returning back to business. Personal protective equipment and adding protective barriers will be needed to remain compliant with social distancing regulations. In addition, social distancing rules could also mean that most businesses will be running in “less than full capacity” for the next coming months.
Although it is not an avalanche of funds, for many struggling businesses, every single dollar counts. This is a welcome boost for many that did not get the opportunity to receive help from other programs.