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Philly’s women- and minority-owned businesses say they’re getting the shaft on emergency coronavirus loans

Many women- and minority-owned businesses remain in the back of the line for emergency loan relief, according to trade groups, bankers, and business owners.

Parallel Architecture Studio owner Carolina Peña. She applied for an SBA loan and has still not heard back from her bank.
Parallel Architecture Studio owner Carolina Peña. She applied for an SBA loan and has still not heard back from her bank.Read moreCourtesy Carolina Peña

Lansdale accountant Christine Walsh helped many of her small-business clients apply for emergency coronavirus relief loans. But she’s still waiting for her own. And while she waits for a lifeline from the Small Business Administration program, she’s already had to lay off some of her 12 employees.

“There’s no reason why my bank [PNC] hasn’t put through my loan. I want to help all my small businesses survive,” Walsh said. "But it seems like the SBA program is being applied unevenly.”

Carolina Peña, a Philadelphia architecture and design business owner, has turned to the local Hispanic Chamber of Commerce for help while she waits on her $46,000 loan application through the federal Paycheck Protection Program (PPP), which officials said Thursday had already burned through the $350 billion appropriated by Congress last month as part of a larger coronavirus economic rescue package.

“I’ve gotten a lot of help through the Hispanic Chamber, sending information and things we can apply for,” Peña said. "But mostly I’ve been navigating this on my own.” she said. Peña applied for a loan for her staff payroll and hasn’t heard back.

Many women- and minority-owned businesses like those run by Walsh and Peña remain in the back of the line for emergency loan relief, according to trade groups, bankers, and business owners.

“Financial literacy is a huge issue, and a lot of business owners are not digitally savvy,” said Donovan West, head of the African-American Chamber of Commerce of Pennsylvania, New Jersey, and Delaware. “Many don’t have the ability to download their payroll or other documentation” for loan applications.

PPP was intended to help small businesses keep employees on the payroll with forgivable, federally backed loans. But it had a rocky start, quickly ran out of money, and the almost 22 million workers who filed for unemployment benefits over the last four weeks have only underscored its shortcomings.

» READ MORE: Philly-area workers on losing their jobs in the coronavirus crisis: 'I feel trapped’

The Trump administration and congressional Republicans are pushing to add $250 billion in PPP funding. Democrats are calling for changes to the program to ensure more loans go to women- and minority-owned businesses, as well as new funding for hospitals and local governments.

West appears regularly on local radio stations to update the black community on SBA and other loan programs, fearing business owners might not know about the emergency funding. “Some people won’t know until we drive down the street with a bullhorn,” he said.

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In a majority-minority city such as Philadelphia, where about 25% of the population falls below the poverty line, “we do not have the luxury of getting the coronavirus recovery wrong," said Jennifer Rodriguez, head of the Greater Philadelphia Hispanic Chamber of Commerce. "We need our corporate leaders and elected officials to get it right — the first time.”

“Getting it right the first time means prioritizing, immediately, the deployment of relief funds and resources, including PPP loans, to minority-owned businesses and businesses located in low-income communities," Rodriguez said. “Largely family-owned, they are the backbone of our neighborhood micro-economies, providing essential goods, services, and employment to those who need it most.”

Most Latino-owned businesses, for example, do not have the kind of relationships with banks that many financial institutions are prioritizing in processing PPP loan applications.

“While this may be a reasonable requirement during normal conditions, we are operating in a crisis and this is not the time to conduct business as usual," Rodriguez said. “Our grocers, hair salons, and construction companies are in jeopardy and it is critical that they obtain access to this capital today.”

Lending consultant Jelani Polite said he’s referred many of his African American business clients to non-bank lenders such as Fountainhead.

Fountainhead is one of only 14 nonbank lenders licensed to make these types of SBA loans, and since Friday it has had more than 400 loan inquiries. The company is known for its speed of funding, which is especially important right now.

Some traditional banks “are asking for additional paperwork and longer SBA applications because they’re worried about finding more collateral,” Polite said.

Indeed, Walsh, the Lansdale accountant, said that "larger banks were inundated, and their website crashed constantly.” The larger loan applicants she helped actually got money first, she noted.

Wash Cycle Laundry owner Gabriel Mandujano said his business account lender was moving too slowly, so “we submitted to Customers Bank. It’s a smaller bank. I’ve heard smaller is better. I spent the entire week, March 30 to April 3, contacting banks. I talked to five different loan officers, at Fulton Bank, WSFS, where we hold deposits, Cambridge Savings, and Eastern Bank in Boston.”

He feels lucky that his $500,000 SBA loan went through Customers Bank.

“The whole loan process was always going to be a mess,” he said. "And I’m lucky and grateful for Wash Cycle. But I don’t know if it’s an equitable process.”

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The local African-American Chamber recently partnered with DiverseForce and Lendistry to provide SBA guidance. Lendistry is the second largest SBA lender in the country and was authorized to provide $10 million in SBA loans to minority-owned businesses in the Philadelphia region.

West particularly credited WSFS and United Bank for making loans to minority business owners.

“We are prepared in the event Congress approves additional funding," WSFS spokeswoman Rebecca Acevedo said. "WSFS has approved more than 2,400 PPP loans across our footprint for a total of $775 million.”