Friday, December 18, 2009

Minority Businesses Shut Out of Stimulus Loans

hat tip:Prometheus6

From New America Media

Minority Businesses Shut Out of Stimulus Loans

Loans handed out to struggling small businesses as part of President Barack Obama's stimulus package have largely shut out minority businesses -- especially those owned by Blacks and Latinos -- according to data provided by the federal government's Small Business Administration (SBA) to New America Media (NAM).

On June 15, the SBA, using money from the $787 billion American Recovery and Reinvestment Act, launched the ARC program, America's Recovery Capital, giving banks and credit unions 100 percent guarantees so they're taking no risk when they make loans of up to $35,000 to previously successful, currently struggling small businesses to help them ride out the recession.

ARC Loans Ethnic Breakdown

Under the program, the borrower pays no interest and makes no payments for 12 months, then has five years to repay the loan. SBA charges no fees and pays interest to the lender at prime - the rate of interest at which banks lend to favored customers - plus 2 percent.

The Obama Administration does not report the racial breakdown of who's benefiting from these loans at, but data obtained by NAM from the SBA found that of the 4,497 ARC loans where the race of the borrower was reported, 4,104 (over 91 percent) went to white-owned firms, 140, (3 percent) went to Hispanic-owned businesses, and 151 (3 percent) went to Asian- or Pacific Islander-owned businesses. Only 65, (1.5 percent) went to black-owned firms.

Overall, white-owned businesses received over $130 million in loans through the program, while Hispanic-owned businesses got $4 million and black-owned businesses less than $2 million.

In five states - Alabama, Arkansas, New Hampshire, South Dakota, and Wyoming -- every single firm that received an ARC loan was white-owned. In eight other states, including Louisiana and Nevada, all but one loan went to a white-owned firm.

Civil rights groups and representatives of the minority business communities reacted with anger when told of NAM's findings.

"It's just horrendous," said Anthony Robinson, director of the Washington, D.C.-based Minority Business Legal Defense and Education Fund (MBELDEF). "During this economic recession, there is no recognition or sensitivity to the need to support and benefit people of color."

"The data raises troubling questions" and should trigger an investigation," says Oren Sellstrom of San Francisco's Lawyers Committee for Civil Rights. "This should be a red flag for the SBA and the banks. It gives us the indication that something may be amiss and further explanation is warranted."

Census figures put black business ownership at 5 percent and Hispanic business ownership at about 7 percent -- more than double the numbers getting these SBA-backed loans.

Rest of article at link above.

I guess that whole 'rising tides' thing isn't working out the way you said it would, Mr. President.

No wonder the White House couldn't be bothered to send someone over to Washington Watch last week, or send over the documents that Roland Martin asked for.

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