PEOPLE OF COLOR are under siege in Massachusetts. The COVID-19 pandemic not only threatens their lives at disproportionate rates, but the economic standstill threatens their livelihood as well. We cannot wait for Congress to act.
If we don’t act quickly as a state to address the current longstanding systemic disparities, we could see the deepest expansion of the racial wealth gap since the Great Recession, one that will affect not only the health of these communities, but also that of our statewide economy long after the virus has passed.
Federal programs are not enough. The most recent attempt to buoy small businesses in the CARES Act through the Paycheck Protection Program (PPP) only served 5 percent of small businesses across the nation. Reports indicate that a quarter of the $349 billion set aside by Congress went to just 2 percent of businesses, like large chain restaurants. And with a new stimulus package signed into law on Friday, it is becoming clear that the same mistakes will be repeated once more, forcing businesses of color to wait in long lines for little support.
Our businesses are being hit hard. Each of our organizations surveyed hundreds of business owners across the Commonwealth. The results revealed two things: that within the next 60 days minority-owned business enterprises (MBEs) are disproportionately at risk of shutting their doors indefinitely, and that the vast majority either did not or could not apply for federal programs like the PPP due to being under-resourced, language barriers, and disjointed federal guidance. This should alarm us all.
A 2019 McKinsey & Company report found that if the nation were to take measures to close the racial wealth gap just between black and white Americans alone, we would add up to $1.5 trillion to the economy over 10 years. Time and again it is proven that business ownership is one of the surest ways of building lasting wealth for families and communities.
Massachusetts was just beginning to move in a positive direction on this matter. This past February, Gov. Charlie Baker announced sweeping changes in the Division of Capital Asset Management and Maintenance (DCAMM) intended to deepen the participation of minority-owned business enterprises in the state contracting process.
However, these advances and other measures are severely threatened if minority-owned businesses do not survive this current crisis. With this in mind, it is apparent that any future congressional stimulus package must be strengthened by state resources and infrastructure.
That is why we joined a coalition of over 50 organizations who recently called on our statewide leadership – Gov. Baker, Senate President Karen Spilka, and House Speaker Robert DeLeo – to adopt the following recommendations for programs and policies that should be part of a state economic relief and recovery program:
- $10 million in funding to support community-based organizations that deliver technical assistance and coaching to small businesses. This would build on the success of the Massachusetts Growth Capital Corporation’s current Small Business Technical Assistance program but would be enough funding to fund additional organizations, deal with the surge of demand, and sustain high quality service at least through FY 2021;
- $30 million in emergency relief grants to help businesses cover rent, mortgages, and other fixed costs. The program should be delivered in partnership with community-based organizations that are rooted in the communities we seek to serve;
- $35 million to Community Development Financial Institutions to help them offer grants, zero/low interest loans, loan deferments, and other assistance to small businesses;
- $75 million to the Massachusetts Growth Capital Corporation for a revolving loan fund to help businesses unable to access SBA financing with a focus on reaching minority-owned businesses and other underserved businesses;
- A statewide small business assistance task force charged with ensuring the effective delivery of support to small businesses during the economic shutdown and through the recovery with a laser focus on equity and inclusion.
Massachusetts is the home of innovation. We know that we can balance meeting the immediate demands of the public health crisis head-on while also addressing historic injustices that lay the foundation for future crises.
It is imperative that the state act now to ensure we protect small, minority-owned businesses, for the development of some communities cannot coexist with the underdevelopment of others. The 13,000 Massachusetts-based minority-owned businesses that employ 125,000 of our residents and contribute several billion dollars to our economy are waiting for swift action. Our future depends on it.
Rosario Ubiera-Minaya is the executive director of Amplify Latinx; Segun Idowu is the executive director of the Black Economic Council of Massachusetts; Joseph Kriesberg is the executive director of the Massachusetts Association of Community Development Corporations.