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politics

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Congress Pressed to Rescue Struggling Black Owned businesses

Lawmakers negotiating the next small-business rescue package are facing mounting pressure to direct more aid to minority employers who are hurting the most during the pandemic but have struggled to access hundreds of billions of federal dollars unleashed since March.

Business groups and consumer advocates are lobbying Congress to rethink a model that has leaned heavily on distributing funds via private lenders because of concerns that the smallest businesses lack relationships with traditional banks.

A bipartisan proposal by Sens. Steve Daines (R-Mont.) and Cory Booker (D-N.J.) — backed by the U.S. Chamber of Commerce — would make $50 billion in grants available to state and local governments for the smallest businesses and nonprofits.

And Senate Small Business Chair Marco Rubio (R-Fla.) is floating new ways to aim funds at the hardest-hit businesses. The expected revamp of the Paycheck Protection Program — the $670 billion effort Congress created to rush forgivable loans to millions of small businesses — is likely to still rely on banks. But Rubio has circulated plans to target long-term loans at businesses that make most of their money in low-income communities and to set aside $25 billion for those with 10 or fewer employees.

“It’s not as simple as just keeping the lights on for the PPP forever,” said Thomas Sullivan, vice president of small business policy at the Chamber of Commerce. “There really does need to be an emphasis toward the underbanked.”

The drive has taken on greater urgency in recent weeks as economic data and surveys have revealed that Black business owners in particular have been disproportionately devastated by the coronavirus recession. The trend holds damaging long-term implications for minority communities as the U.S. moves into what is likely to be an uneven economic recovery.

One widely cited economic analysis showed that Black-owned businesses were slammed the most by Covid-19, with the number of owners plunging by 41 percent from February to April. Research by the JPMorgan Chase Institute showed cash balances for Black businesses were down by 26 percent at the end of March from a year earlier, compared with a 12 percent decline for all firms.

Left unaddressed, the ripple effects of a wave of closures would be significant. Black-owned businesses are more likely to hire Black workers, offering a crucial source of jobs for a population whose unemployment rate has historically been roughly double that of white Americans, even in a strong economy.

They are also more likely to be located in majority-Black communities, helping boost property values for homes and businesses there. A disproportionate loss of Black-owned businesses could also widen the already staggering racial wealth gap in the country, where the average white family has 10 times greater net worth than the average Black family.

As a huge proportion of Black-owned businesses are forced to close, “what wealth is there now to transfer on?” said Gary Hoover, editor of the Journal of Economics, Race, and Policy and an economics professor at the University of Oklahoma. “I’ve got a higher unemployment rate in this community. Now I’ve got lower property values in this community. I’ve got less wealth in this community. Things are just continual.”

Advocates argue that the Paycheck Protection Program failed to fully address the problem, in part because it was structured to favor borrowers who have ongoing ties to banks, which businesses owned by people of color are less likely to have.

“We got off to a bad start for the underserved communities,” Sen. Ben Cardin of Maryland, the top Democrat on the Senate Small Business Committee, said in an interview.

Montee Holland, president and CEO of a high-fashion dress suit brand called the Tayion Collection, said he was initially rejected for a PPP loan and then struggled to get approved for another.

The Michigan-based designer said he has managed to pay his rent and bills by selling the suits he had in stock directly to consumers online. But without assistance or a major change in the retail landscape, he expects to be able to last only six to eight more months.

“To say that it’s been tough is the understatement of the century,” he said.

Congress has tried to close the gaps, but advocates say more can be done.

After overwhelming demand for the Paycheck Protection Program exhausted its initial funding by mid-April, Congress passed a second, $320 billion appropriation that set aside money for the smallest lenders. Some of those funds went to lenders whose mission is working with disadvantaged communities.

In response to calls to target the funding even further, the Trump administration allocated $10 billion for so-called community development financial institutions, which focus on low-income areas.

And just days before the Paycheck Protection Program was set to close to applications — Congress has since agreed to extend it — the Trump administration loosened some restrictions on borrowers with criminal records after facing lawsuits and political pressure from Democrats and Republicans.

The last-minute change gave Altimont Wilks time to secure a loan to help his businesses in Hagerstown, Md. A federal judge last week ordered the Small Business Administration to reserve funding for Wilks once the program shut down. Wilks was initially barred from the program because of a 2004 felony conviction.

“You hear the stories, but to live it, to be that ‘African American disadvantaged minority business owner’ — imagine being that disadvantaged owner with a criminal record, during a time when unemployment is going sky high not just for African Americans but for everyone,” Wilks said in an interview.

Economists have criticized the time it took to make the funds more widely available, saying some minority-owned businesses could not survive long enough even to apply for the second round of aid.

“Just the weeks that went by between those time periods could be the difference between the life and death of a business,” said Henry McKoy, director of entrepreneurship at North Carolina Central University’s business school.

“The really small businesses, the businesses with one employee, the businesses owned by people of color, they need super-small loans,” said Ashley Harrington, director of federal advocacy at the Center for Responsible Lending. “The way the PPP is structured, banks are paid an origination fee based on the size of the loan. The size of the loan is based on the size of the payroll. If we want to incentivize banks to serve the really small businesses and the businesses owned by people of color, the origination fee has to match that.”

Rep. Dan Kildee (D-Mich.), who is sponsoring the legislation that would create a $50 billion grant program for businesses and nonprofits with up to 20 or 50 employees, said the smallest businesses were at high risk of not getting help under the PPP model.

“These are really small businesses for which the machinations of going through loan underwriting and then loan forgiveness are just completely unnecessary,” he said of his legislation with Daines and Booker. “Very often these are women, minority-owned or veteran-owned businesses.”

One problem that Congress faces in targeting the aid is the lack of data provided by the Trump administration on the loans. The SBA has only just agreed to disclose loan recipients to Congress and the public, but the agency did not collect demographic information in the PPP application.

But based on some of the alarming anecdotal information available, lawmakers are near agreement on ways to try to direct funds to the hardest-hit minority businesses.

“We did better as the program went along. What the final result is, we don’t know yet,” Cardin said in an interview. “The good news is both Senator Rubio and I believe we need to target funds to the underbanked and underserved communities.”

Source: Politico

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Assemblywoman Angela McKnight helps create laws that actually make a difference

In our collective pursuit of economic empowerment, it is important to acknowledge the role of politics. It is also important to acknowledge the public officials that are working to create the policies that can help us  achieve our economic goals.

Assemblywoman Angela McKnight, the 1st African American Assemblywoman for the 31st District for the state of New Jersey, is one such person.

Angela V. McKnight, newly elected as the 1st African American Assemblywoman for the 31st District for the state of New Jersey

What inspired you to get into politics?

Based on the prior work I had been doing in the community since about 2010; I was approached by the Mayor of Jersey City and the County Democratic Organization to run for the Legislative District 31 Assembly seat. After speaking with my family and close friends, we collectively decided that running for office would place me in a better position to advocate for my community.

As an elected official, I have been able to take the work that I have been doing on a local level and implement change through advocating and creating policies in our capital, Trenton, New Jersey.

What existing policies do you feel are most beneficial to business owners and what types don’t exist but should?

Some examples of policies on a state level that are beneficial to business owners are Opportunity Zones and Urban Enterprise Zones, New Jersey’s Small Business Development Centers, and various incentives for Minority/ Women Owned Businesses. The State of New Jersey aims to foster a thriving environment for small businesses and entrepreneurs.

Our policies are very forward thinking; for example in 2018, New Jersey passed the strongest pay equity law in the country and paid sick leave. In order to make our economy stronger, I believe our state needs to raise our minimum wage to a livable wage so everyone can contribute to our economy without constantly struggling to make ends meet.

Photo credit: The Moorefield Group

You recently teamed up with Tiffany Aliche to get a financial literacy law passed. Can you explain the significance of this law?

This bill (A-1414) expands on the New Jersey Student Learning financial literacy standards that are in place for New Jersey public school students in grades K-8. What is unique about A-1414 is that it establishes uniform requirements for each grade from grades 6-8. With the current standards, which are not mandated by law, students must learn about various aspects of financial literacy “by the end of grade 4,” “by the end of grade 8” and “by the end of grade 12.”

Tiffany “The Budgetnista” Aliche , Acting Governor Shiela Oliver and Assemblywoman Angela McKnight. Photo Credit: Anthony McKnight

Through A-1414, public school districts are mandated by law to incorporate financial literacy in each grade 6-8. The goal of this bill is to develop state-mandated, uniform requirements that districts must implement. In other words, the intent is to help students learn and implement best practices for managing money prior to adulthood.

The signing of Bill A1414 (Assemblywoman Angela McKnight, 3rd from left; Acting Governor Shiela Oliver, seated. Credit: Anthony McKnight)

What is a law or bill you got passed that benefits the business owners in your local community?

In 2018 I sponsored a piece of legislation, A-3754, which establishes a limited license for hair braiding. The bill was signed into law and went into effect on January 2, 2019.

I wanted to make sure that hair braiders, who are predominantly African-American and African immigrant women, are able to use their skills to support themselves and their families, without excessive regulation. I want to support entrepreneurship. As a result of this law, hair braiders can now practice their talents without fear of excessive fines.

Assemblywoman McKnight with a group of entrepreneurs that will benefit from legislation, A-3754 that she helped sign into law.

In your opinion how can entrepreneurs collaborate with their local government officials to promote economic development?

Entrepreneurs can collaborate with their local government officials by engaging in the process and letting them know what policies/ procedures are doing well and what can be improved. Without input from the community, local officials will not be able to accurately assess what is best for their constituents.

 

Tony Oluwatoyin Lawson (IG @thebusyafrican)

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Politician Aims to be the First Black Woman Governor in U.S History

Stacey Abrams, a politician from Georgia, launched what she hopes will be a history-making campaign Saturday when she officially announced her candidacy for governor of the Peach State.

Georgia House Minority Leader Stacey Abrams at Chehaw Park in Albany, Ga. on Saturday, June 3, 2017, when she announced her run. (Melissa Golden/Melissa Golden)

The 43-year-old Democratic leader of the Georgia State House, who enters as the front-runner for her party’s nomination, is aiming to become the first Black woman to be elected governor in U.S. history.

Abrams is widely considered to be one of the most skilled and savvy political leaders in the state legislature and hopes to replace term-limited Gov. Nathan Deal (R), who has served since 2011.

Photo credit: staceyabrams.com

But it won’t be easy: No Democrat has won statewide office in Georgia since 2006, and just 11 black women have ever been elected to statewide positions nationwide.

“Pray for me and work with me,” Abrams told about 100 supporters who braved persistent swarms of gnats to help her kick off her campaign at a barbecue at Chehaw Park in Albany, a small city about three hours south of Atlanta. “I want government to work everyday, for everyone.”

Photo by Dorothy Kozlowski

Abrams, a Yale-trained lawyer and business executive who writes romance novels on the side, has an army of supporters across the country eager to prove Democrats can win if the party puts its energy into expanding its base among the increasingly diverse state population rather than fretting over white swing voters.

Photo credit: The Augusta Chronicle

That is what Abrams has tried to do as founder of an organization that says it has registered 200,000 new voters in Georgia — along with her work in the state’s House, often while cooperating with Republicans on key legislation and policies — has made her popular with progressives who say the party should rebuild and strengthen the coalition that elected and reelected President Barack Obama.

Photo credit: MyAJC.com

The rapidly changing complexion of the South, which has seen the percentages of African Americans, Hispanics and Asian Americans increase, creates the potential for a political makeover. Abrams and other progressive political activists of color believe new voters will want candidates who look more like them.

 

Read the rest at the The Washington Post

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6 Black Issues That Public Policy Must Address Immediately

Despite the importance of economic empowerment, I would argue that political power plays a bigger role in wealth creation.

Political power influences public policy and legislature that address many socioeconomic issues that affect our ability to even start building a strong economic base.

Here are a few issues affecting the Black community that public policy must address right now.

1)Prison Industrial Complex

The prison industrial complex can be described as the overlapping interests of government and industry that use policing, and imprisonment as solutions to economic, social, and political problems. To fuel the growing demand for profitable prison labor, Black people, in particular, are disproportionately incarcerated and given longer sentences than any other race.

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This is not new news though. Neither is the fact that there are several corporations that benefit from the mass incarceration of Black people. In many cases several of these corporations have become part of our daily lives. However, its time to cut the cord and divert our money into alternative options, preferably Black owned.

2)Education

In his book,  Mis-Education of the Negro, Dr. Carter G. Woodson wrote, “Blacks are the only group of people who take their most precious possessions, their children, and ask their oppressors to educate them and mold and shape their minds.”

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Currently, the education system waters down our history and completely ignores many of our accomplishments. Black students all over the country also face verbal and physical abuse not only from students, but from those hired to educate and protect them.

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In addition to this, many Black students are increasingly becoming victims of theschool to prison pipeline” that pushes them out of classrooms and into the juvenile and criminal justice systems.

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Educating Black children should involve more than teaching them math and reading skills. They must also be taught how to produce goods and services and not just be consumers.  They must also be taught the skills needed to become business owners and job producers not just job seekers.

3)Lack of Affordable Housing

By affordable housing I don’t just mean Section 8 or low income housing. I literally mean housing that is affordable. Being able to afford your home or apartment is vital to the Black community’s economic strength. It provides the foundation for families and individuals to succeed in their careers or at school, as well as to thrive in retirement.

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There is a epidemic of gentrification that is occurring in Black neighborhoods all over the world, causing sharp increases in rents and home values and resulting in actual or imminent displacement of residents.

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There are several ways to combat gentrification using policies but in this instance I’ll suggest how to utilize economics to do so. Invest in Real Estate Investment Trusts(REIT’s). REIT’s are corporations that own and manage a collection of real estate properties and mortgages. Individually or as investment groups, we can invest or even form REIT’s that acquire and own residential homes and apartment buildings in Black neighborhoods across the country.

4)Food Deserts

In many Black communities, access to grocery stores, supermarkets and other food retailers that offer affordable and nutritious food is limited. These food deserts force members of the community to be more reliant on convenience stores, fast food or similar retailers.

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After almost 20 years of unsuccessful attempts to attract a corporate grocery chain to their community, The Renaissance Community Co-op of  Greensboro, NC raised over $2.4 million and was able to build a grocery store that served the community and provided jobs.

We need more examples like this in other areas that are deprived of healthy food options. One could purchase a van, buy produce from Black farmers and make scheduled stops in these areas to sell healthy produce. The American Community Garden Association (ACGA) provides resources for over 18,000 community gardens in the U.S. and Canada.

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5) Supporting Black Farmers

Black farmers have been facing discrimination from the USDA for decades. The National Black Farmers Association offers resources and programs that teach “the basic, sustainable practices of building and maintaining a garden.”

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They offer workshops on seed and variety selection, planting practices as well as how to plan and manage your crops throughout the seasons. We listed some Black owned farms in a previous post about health and wellness.

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6)The Growing Wealth Gap

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“To be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardships.” W.E.B. Dubois – Souls of Black Folks

Pew Research Center data from 2014 states that that the wealth of white households had reached 13 times the median wealth of black households, compared with eight times the wealth in 2010.

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Let’s not be fooled by reports that Black income has risen. Income does not equal wealth. According to a recent working paper, high-earning married black households have, on average, less wealth than low-earning married white households.

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The ever widening wealth gap exists for several reasons including racial discrimination,  tax policies that favor the (disproportionately white) rich and lack of sound financial education and practices. The wealthy get wealthier through tax cuts on investment income and inheritances, retirement accounts, home mortgages and college savings.

 

The Role of Elected Officials

Who creates and has the power to influence policies and legislature that affect us positively or negatively? Your elected officials do. They were elected to serve us. Therefore, we need to make sure they are doing so and not taking our votes for granted.

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Ask them, “What have you done for me lately?” Hold them accountable and make sure they address the issues that are important to you.

 

Tony Oluwatoyin Lawson (IG: @thebusyafrican)