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The Great American Rescue is leaving minority businesses behind

As Congress closes in on the next small business stabilization package, equity can’t be an afterthought.

Nestled in Nubian Square, the Dudley Cafe is closed because of the coronavirus pandemic.Pat Greenhouse/Globe Staff/The Boston Globe

Who is getting left behind in the Great American Business Rescue?

It’s the same as always: the smallest firms.

The federal government is printing trillions of dollars like never before to save the economy, and yet the moms and pops who need it the most may never see a penny.

And that’s bad news, perhaps more so for entrepreneurs of color, whose businesses are overwhelmingly small and who already face significant obstacles.

Minority-owned businesses tend not to have the banking, legal, and accounting relationships needed to help them navigate the complicated process of applying for rescue loans from the Small Business Administration. These owners also aren’t comfortable borrowing money to fuel growth — or in this case survive.


Consider how Julia De Los Santos, whose tailoring shop in Dorchester has two employees, viewed the SBA’s $349 billion Paycheck Protection Program that others treated like a gold rush: “I’m not thinking about this . . . I don’t want to get money I have to repay later.”

As Congress closes in on the next package — with potentially another $350 billion in SBA loans and grants — equity can’t be an afterthought. We saw what happened with the first money grab: Big restaurant chains, including Ruth’s Chris, Potbelly’s, and Shake Shack, scored tens of millions of dollars in loans. After a public uproar, Shake Shack grew a conscience and returned the money.

In an interview, Representative Ayanna Pressley said the “first come, first serve” nature of the program put minority-owned businesses at a disadvantage that ultimately “compounded the inequities that we already know exist.”

Haris Hardaway took down a sale sign from the window of his Final Touch With Class Boutique in Roxbury.Pat Greenhouse/Globe Staff/The Boston Globe

As a result, she added, “relief was not being equitably felt.”

Just as Pressley has called on the Centers for Disease Control to report daily the racial breakout of COVID-19 cases, she — along with New York Representative Gregory Meeks and Senators Kamala Harris and Sherrod Brown — has been leading a push for Treasury to compel banks to collect demographic data of loan recipients and ensure that fair lending practices are applied.


In a letter sent Thursday to Treasury Secretary Steve Mnuchin and SBA Administrator Jovita Carranzathe Democrats cite a 2016 Federal Reserve Bank survey that found of all minority-owned firms that were approved for loans, only 40 percent received the full amount requested, compared to 68 percent of white-owned firms with similar credit scores. The letter also referenced how minority-owned businesses are less likely to apply for small business loans because they feared rejection.

“The laws are there. They are only good as their implementation. There is an oversight role. By offering that guidance [to banks], it does hold people accountable,” Pressley said in an interview. “We have to be intentional about dismantling structural barriers.”

All of this matters because of what happened during the Great Recession.

Black-owned and women-owned businesses failed at a higher rate than small firms run by white men, according to a Brookings Institution report that looked at companies that existed in 2002 and were still around in 2011, two years after the end of the last recession.

Businesses owned by people of color and women tend to have 30 percent fewer employees compared with male- or white-owned firms, according to Brookings. On average, minority-owned and women-owned firms have about 8 employees.


Still, businesses owned by people of color and women played an outsize role in the country’s recovery from the Great Recession. According to Brookings, these businesses created 1.8 million jobs from 2007 to 2012, while firms owned by white men lost 800,000 jobs. Job growth came in health care, hospitality, and food service industries, which have a higher share of minority and female entrepreneurs.

The upshot: Helping minority-owned firms find their financial footing is not only critical to them, but to all of us.

Given that the smallest businesses find most loans too risky, some think the government should allocate money for grants to these firms. Count Eastern Bank chief executive Bob Rivers in that camp.

“The next $250 billion can’t be another gold rush,” said Rivers, whose bank received 8,000 loan applications over two weeks in what it typically processes in a year. “You have to put a fence around money for businesses that are really small. You have to put a fence around for businesses of color.”

That was the impetus behind last week’s launch of the Business Equity COVID-19 Emergency Fund to support Black and Latinx businesses in Massachusetts. A coalition of community organizations — including Amplify Latinx, Black Economic Council of Massachusetts, the Boston Foundation’s Business Equity Fund, and Foundation for Business Equity — is raising $10 million to provide no-interest bridge loans, up to $100,000, and no payments for one year. The loan recipients also get access to advisers to help with business strategy to navigate the pandemic-induced downturn.


The fund has seed money from Accordia Partners, Berkshire Bank Foundation, Boston Foundation, Cummings Foundation, and Eastern Bank Charitable Foundation. The first batch of loans are expected to be issued by the end of the month.

Given Boston’s reputation as being unfriendly to people of color, leaders have to make sure the economic shock of the pandemic doesn’t exacerbate existing inequities, says Glynn Lloyd, executive director of the Foundation for Business Equity.

“We have to make sure we have the appropriate tools,” said Lloyd. “How does Massachusetts and Boston become more of a leader in that?”

De Los Santos, who owns JDLS Couture in Dorchester’s Codman Square, may be wary of loans, but she welcomes other kinds of help. Compass Working Capital, a nonprofit that provides financial coaching and savings programs, helped launch her shop in 2017, and now the group is helping her pivot in the interim to make cloth masks. When the economy shutdown, she could no longer do alterations, and customers cancelled orders for custom prom dresses and wedding gowns.

Compass raised $7,500 through donors, which allowed De Los Santos to buy material and bring back two workers to sew 1,000 masks, which were given away for free on Monday to community leaders for distribution to residents in Boston Housing Authority developments.

Andrea Campbell, the city councilor who brought in Compass for partnerships, said minority businesses need different kinds of access to capital — and quickly.


“Government is slow to do that,” said Campbell. “If you want these businesses to repurpose, you have to give them the resources fast.”

The experience is giving De Los Santos, a Dominican immigrant, the confidence to start selling custom masks and hats on her website.

“I just want to work,” said De Los Santos. “This is the only thing I know how to survive this crisis is working, working, and working.”

Minority-owned businesses also play another important role: They tend to set up shop in communities of color and hire people of color, becoming an economic engine onto themselves. Now that ecosystem is threatened in neighborhoods like Roxbury’s Nubian Square.

The Hardaway family, which opened Final Touch With Class Boutique in 2015 in the Bolling building, applied unsuccessfully for a disaster grant through the SBA.

Now what?

“That’s probably the million-dollar question,” said Haris Hardaway, who co-owns the boutique with his mother, Catherine.

The shop has been closed for more than a month, and its lone employee, the store manager, was let go. The Hardaways hope they can open the store in June so they can at least unload the spring clothes and accessories they had purchased. Yes, there will be a big sale.

“I say to Haris, ‘I don’t feel like this is real. I feel like I am in a dream and I will wake up and it will be over,' " said Catherine Hardaway, who serves as president.

This year was supposed to be a breakout year — the boutique aired its first TV commercial before the pandemic hit, and Catherine Hardaway planned to step back and have her son take the reins.

Not anymore, or as Haris puts it: “It’s all hands on deck.”

Without any loans, the Hardaways can only hope the economy will remain open for the Christmas shopping season, which is when retailers make much of the profit for the year.

“If there is no Christmas," said Haris Hardaway, “I don’t know what will happen."

Shirley Leung is a Business columnist. She can be reached at