SBA: businesses owned by people of color are being left behind

May 15, 2020

Archie Sudue owner of Mel Styles
Credit Archie Sudue

Archie Sudue is the owner of Mel Styles, a menswear store in Grand Rapids. It’s known for providing custom-fitted men’s suits. He says when the stay-at-home order was implemented in early March, order cancellations began rolling in.

“We had about ten weddings that (have) already (been) cancelled, prom season is cancelled, graduation is cancelled," Sudue said. "So it’s just a lot."  

Sudue says he found out about the Paycheck Protection Program loan right after it’s April 3rd  launch and submitted an application.

“I applied at least about eight to ten times with the PPP,” he said. 

Applications filed with a number of banks, but denied repeatedly. Sudue employs less than 10 people and is sole proprietor.

$30 billion dollars from the PPP were set aside to help small business owners like Sudue, but a new report from the Small Business Administration’s inspector general found that small businesses owned by people of color did not receive access to the loans in the same way their white counterparts did.

Jamiel Robinson founder of Grand Rapids Area Black Business, a start-up economic development company, says he’s not surprised by the report’s findings.

“All you have to do is look at how traditional lending from financial institutions, banks and credit unions, have historically left out businesses even pre-COVID crisis, and so it’s not surprising," Robinson said. "The system is still going to function and operate the same way.”

According to a report from the Center for Responsible Lending, businesses of color stand close to no chance of receiving a PPP loan through a mainstream bank or credit union.

“I spoke with a couple financial institutions then who were really looking to get their money out to some of their bigger clients and we know on average that Black businesses have revenues of less than $100,000 dollars a year so it doesn’t necessarily put us on the top of mind.”

According to the Center for Responsible Lending, a solution is requiring 20% of PPP lending to be set aside for businesses of color and opening the program to all small businesses that filed 2018 or 2019 tax returns.