U.S. Senator Ben Cardin

Letters From Ben

June 13, 2020

Saving Minority Small Businesses, Saving Jobs 


The COVID-19 pandemic is, first and foremost, a public health crisis. But when the economic toll started to hit Maryland and our country fast and hard, it became clear that Congress also needed to work to support America’s 30 million small businesses and their workers.

Every business we prevent from failing now, is a business that will be in a position to create jobs during the recovery.

I was proud to be part of the bipartisan Small Business Task Force that negotiated and wrote the small business provisions of the CARES Act along with Senators Marco Rubio, Jeanne Shaheen and Susan Collins. Together, we created three economic relief programs for small businesses: the Paycheck Protection Program, a new grant program under the Economic Injury Disaster Loan program, and a debt relief program, which covers the principal and interest payments on new and existing SBA 7(a), 504 and Microloans for 6 months.

Over the past two months, the largest of those programs, PPP, has provided 4.5 million loans worth more than $510 billion.

Congressional action up to this point has helped millions of small businesses and entrepreneurs access emergency financing to weather this economic storm. However, it appears that traditionally underserved business owners, including minorities, women, and those in rural areas, may have been disproportionately left behind.

Senator Shaheen and I drafted language in the CARES Act instructing the Small Business Administration (SBA) and the Treasury to issue guidance to financial institutions participating in the PPP to prioritize loans from underserved small businesses. You can imagine my disappointment when the SBA Inspector General reported that implementation of PPP “did not fully align” with the Congressional intent of the CARES Act, because SBA did not provide guidance on prioritizing underserved and rural markets. The SBA also has failed to collect demographic information for small businesses seeking PPP loans. 

While I appreciate that SBA has set aside an additional $10 billion in PPP funding for Community Development Financial Institutions (CDFIs) – at Congress’ direction – it is important that SBA follow the Inspector General’s call to provide guidance to lenders to prioritize underserved markets.

Congress be more strategic in our targeting and move to bolster our most vulnerable small businesses through this crisis.

We know that during times of economic crisis, underserved business owners experience a disproportionate credit crunch; for example, between 2007 and 2010, the percentage of 7(a) approvals that went to black borrowers dropped precipitously from 14% to 3% and never fully recovered. We cannot allow history to repeat itself during our current crisis.

Minority business owners are 2 to 3 times more likely to be denied loans than non-minority business owners and are more likely to receive less funding and pay higher interest rates on the loans they do receive.

This cyclical, systemic problem cries out for a holistic approach. It’s why I am committed to ensuring that the programs we created to provide financial relief to those affected by COVID-19 are reaching minority communities. I worked with Senator Cory Booker (D-N.J.) to create a proposal to prevent underserved and underbanked business owners, including minorities, women, and those in rural areas, from falling further behind during and after the COVID-19 economic crisis. Our initiative would make it easier for underserved small business owners to access the capital they need to survive COVID-19. It also addresses historical, systemic disparities in access to capital, as well as technical training and mentorship.

The protests sparked by the death of George Floyd have raised awareness of the disparate public health and economic consequences of the COVID-19 pandemic on communities of color—black Americans in particular. Targeting greater support to black and minority small businesses does not mean we do not value other small businesses. It means we recognize the systemic problems facing minority small businesses and we are willing to take steps to help knock down the barriers that have kept them from fulfilling their true potential.

Minority-owned small businesses are key drivers of America’s job and productivity growth – it is in the interest of our entire economy to invest in them. But more importantly, it’s the right thing to do.

Thank you. Please stay safe.

      Ben Cardin