Financial support for minority-owned businesses during the pandemic
CENTRAL COAST, Calif. (KION-TV) Since March 2020 with shutdowns and mask mandates, businesses are struggling to survive.
Jonathan Seguil, owns the "Flying Artichoke" restaurant in Salinas and said if it weren't for the federal loans he received that year, he would have had to shut down completely.
"I had enough to support them for a couple of months while we could pay them back. After that, we would either shut it down or do something else," Seguil commented.
But even though the restaurant is keeping its head above water financially, Seguil said he only received $25,000 in payroll protection program (PPP) loans to last him at most two months to pay all his employees and like many restaurant owners, he had to look for more alternatives.
Jonathan Seguil applied for a Small Business Association loan and was offered $100,000.
"I didn't know it was going to be that long. So I only took $65,000 and they said to me - other friends who have restaurants - why didn't you take the whole loan? I told them, I don't want to be in debt."
Seguil is an example of how a loan can help an individual business stay in business. And although he's still paying it off, two years later, the federal loan allowed him to pay his employees and keep his business open.
Like the Flying Artichoke, there are scores of businesses across the country facing a very similar struggle since the pandemic began.
In light of this situation, last month the Biden administration announced a program that is supposed to help minority business owners receive loans, businesses that are owned by people of color and Latinos, as well as businesses that provide job opportunities for Hispanics, such as Alcachofa Voladora.
"I am very proud to announce that nearly $9 billion is now available to increase lending to businesses in underserved communities," said U.S. Vice President Kamala Harris at the program's launch.
Biden's Emergency Capital Investment Program - also known as ECIP - is an $8.7 billion investment in community development financial institutions (CDFIs) and minority depository institutions (MDIs) that aims to increase lending to small and minority-owned businesses by low- to moderate-income consumers in underserved rural, urban and Native communities.
Of nearly 200 credit unions and banks that received these funds, 10 are in California and only three are located in Oakland and San Francisco.
We contacted all three to see if any Central Coast businesses received a loan, but only one of them worked with clients outside the Bay Area.
"One of our focuses by the foundation that governs us is to maximize prosperity in communities of equality and inclusion," said Beneficial State Bank Assistant Vice President Manny Barragan.
Beneficial State Bank (BSB) offers loans throughout the state of California, although its offices are located in Oakland.
However, no institutions in Monterey or Santa Cruz counties applied for a loan under this program.
This means that large counties like Monterey or Santa Cruz, which have a significant percentage of minority businesses in rural areas, do not have access to or visibility of these funds that have proven to be pure oxygen for economically distressed businesses, although they do have the BSB option.
We will not decline an application simply because an institution, business or foundation is in an area outside of our focus," Barragan clarified.
The bank has not yet received the funds from the Treasury but Manny says the inflow of capital from the Treasury Department will help the bank make more loans and focus on its mission and he also leaves his advice for businesses that would like to apply.
"The fact that they have everything in order: financial statements, taxes and business structure documents, is very important for financial institutions, because that's what they screen to see if they can receive a loan," Manny said.
Businesses now face a new concern: massive contagions of the Omicron variant and that fewer people can go out to consume, therefore, support will be fundamental for minority businesses to be able to move forward.