tv Rep. Judy Chu on Diversity in Small Businesses CSPAN November 6, 2021 4:23am-5:02am EDT
live. >> i thank you for having me. >> many businesses suffered during the pandemic but i'd like you to talk a little about impact on small businesses and particularly minority owned small businesses which i think were particularly hard hit. >> yes. many minority small businesses were inteed very hard hit. they did not have the same access to resources that others did. and as a result it was harder for them to be able to know where to go and what to do. now, i have many asian-owned businesses in my district, along with other minority businesses. nonetheless because of the misinformation on xenophobia coming from the coronavirus, the asian-owned businesses were especially hard hit by rumors and the kinds of shunning that was occurring due to the pandemic. and some of them closed very
early on, suffering financially and of course suffering in terms of jobs lost. but actually, it was -- minority small businesses that really had a hard time so this is why we were so alarmed when we did the paycheck protection program. many millions of dollars that were supposed to be dispensed. but the big bang instead turned to their largest customers to give those loans. and as a result we had situations where 20 million dollars was being given do a publicly traded company like ruth chris but small businesses, and specially minority small business were shunned. even though they may have been a customer of, say, bank of america or wells fargo for 20 years. if they didn't have a big loan
with those big banks, they could not get a ppp loan. as a result so many of us, including myself, got tons of calls from minority small businesses who couldn't get through, didn't know where to go and were without resources for those small business loans. so this is why we then created a set aside, a ppp set aside for the community bank t credit unions and the community financial institutions to be able to lend to those underserved businesses, women, veterans, businesses of color, so that they could have the access to ppp loans that they needed. >> i'd like to bring you back onto the impact of these racist attacks.
you are a member of the congressional asia pacific american caucus. what was the impact to neighborhoods? how were asian-americans managing who were running small businesses and what was the impact on their neighborhoods at that time? >> when -- first started there were very heavy rumors and misinformation that was being spread that there was coronavirus emanating from those businesses. and as a result some businesses were targeted with horrendous flyers and social media was telling people to stay away from these businesses. so they really suffered. and some of them did indeed close down. and then president trump started calling the virus, china virus, wuhan virus and kung flu. and as a result there were hate crimes and hate incidents
against the small businesses as well as just asian-americans that were on the street. as of now there are 7500 anti-asian hate crimes and incidents that have taken place across america. and actually i think that is an undercount because a collection of data on hate crimes is very flawed in this country. nonetheless we started our own hate crime collecting site and found that there were many thousands of these hate crimes and incidents that were affecting the community as a whole. so many of them being reported on a daily basis that the asian-americans started wondering will i be next. >> let's think back a little before the up and down. you have been an advocate for small businesses before them including --. can you tell me exactly how that program works? >> so there are so many minority
small business owners that get turned down by a traditional bank. they may not have the credit history. they may not have the language facility. but for whatever reason they get turned down. and they may just turn down from an sba loan. the seven a sba loan which is very popular. the community advantage program was started as a pilot program and has been operating since 2011 to be able to give those who might not fit the traditional profile for a loan to be able to get a loan. for instance, someone like colin fung who testified at one of my hearings talked about starting a restaurant, a ramen shop
actually and then wanted to expand. he went to a traditional bank but he couldn't get anywhere because he had no credit history in this country. he also had limited english proficiency. and he needed to talk to someone who could talk him through the process in his own language. so he went to a community financial institution and they were able to get him a community advantage loan of $60,000 and that made all the difference in the world. he actually has now expanded his ramen business to three shops. so he has three restaurants that are ramen businesses. >> it is wonderful to hear success stories. a little about the role that the private sector can play here in helping small businesses. what is the function? what's the role you see success stories there. >> oh of course.
we have such incredible programs like community advantage, like our sba programs. and we want our financial institutions to participate in those programs. but this goes to exactly why i have a bill to make community advantage permanent. because i have talked to financial institutions and they say well, this is something we want to do. but we want to make sure that if we set up such a program in our bank, that this program is around to stay. so it being a pilot program that has to be renewed every few years, makes them feel -- feel insecure about starting such a thing. that is why i have this bill to make the program permanent and also make other improvements in the program. so yes, there are so many ways
in which our financial institutions of the private sector could help in making sure that there is outreach to minority small businesses. and in fact let me tell you that the american rescue plan also created the community navigators program. so that there could be proactive outreach to minority businesses. so that they could be directed in the best ways for them to get the financial help that they need. so yes, the private sector could participate in that as well. >> what you are talking about as well you are embracing as part of the infrastructure plan that is moving through at the moment. is that correct? >> well the community navigators program actually was passed in the american rescue plan. so it is available even now. however i do have to say that the infrastructure bill t plan
president biden is proposing actually has more for minority small businesses. for instance, grants that would be administered through the minority business development agency but also for the start-ups for the small business investment programs that could help new businesses which we know will be plentiful as people start to get to the realization anyway this may be the time to start the new small business that they have always wanted to. or maybe their small business closed during the pandemic and they have to come up with a new idea that will be successful. so yes, that's what we believe should be integral to any infrastructure package that comes forth now. >> you spoke about ppp. do you believe there is need for greater oversight to make sure that money goes to the right people?
>> yes. there definitely needs to be greater oversight. one very very disappointing thing was that the sba did not require that the institutions say whether the business was a business of color, a minority business that is, woman or a veteran. and since that was not implemented, even though we actually had that requirement in our bill, in our covid bills. as a result we have lost very, very valuable information as to whether we are really serving the small businesses of need. and so we are trying to make sure that they are indeed served. and we can only do that through oversight after the fact. nonetheless, we're requiring that from here on out, that that
demographic data is indeed collected. that we have these satisfied programs that will make sure that the smallest of small businesses are indeed served. actually, i believe that we have had success in just looking at what the average loan amount from ppp is right now which is $67,000. so the smaller businesses are indeed being given the loans that they need. nonetheless we want a more complete picture of what's going on. >> i'd like to ask you a more cultural question about the importance of the success or failure of small businesses in underrepresented communities and sometimes marginalized communities. what does it mean to an underserved community to see a small business in them either go ahead or drop out of business
altogether? >> oh, well, in my district, there are so many small businesses that are started by immigrants, women, people of color, veterans coming back and just trying to get a foothold into things. but let's just take the case of immigrants. they come and they know that they can cook food from the native country. so they start a business, a restaurant. and when they are able to provide things that, items that people enjoy eating, and they can provide a place for gathering for people from that country, that is just so unifying for the neighborhood. and it makes people feel that they belong. so yeah, these small businesses become a huge part of that
community and can create a neighborly feeling, can create a way for people to communicate with one another to make people feel at home. and so when that small business goes away, it is just like something in your heart goes away. it leaves a hole in your heart because it has become such a strong part of your every day life. >> what do you say to critics who worry the -- could actually set back the economic recovery? >> i think the opposite is true. that we need it to have infusion of funds in order to make sure these small businesses could succeed. and i don't know what we would have done if all these businesses had gone under. i can't tell you how many small
business owners have come up to me and told me they got a ppp loan that it was the thing that helped make ends meet, despite the fact that they lost customers. or maybe had to close down completely. or had to layoff employees. or furlong them. believe me, they have so many heartbreaking stories. and they have so much worry at the time. they needed these infusion of funds to be able to keep on going. and that's why i am so proud that we did have ppp even though yeah there were difficulties at the beginning. this is why i'm also proud that we have the restaurant revitalization fund as well as the shuttered venues fund. you know that restaurants really suffered during this time period. and they have these terrible restrictions that, well, made
them go down and had them only be able to do delivery, of course many tell me that that really, even though that was good, it didn't make up for the loss of funds from when the restaurant was truly open. so that is why we definitely needed the restaurant revitalization fund. and then on the shutter venues, we have so many wonderful venues like in los angeles, the troubadour which is historic significance as music gathering place. they could not open at all. these are kinds of venues where you rely on a crowd to come in to listen to music or to witness a game or something. and they definitely needed the ability to have funds that keep them alive so that eventually they could open up again. i don't know what they would have done. what the restaurants would have
done or any of these small businesses would have done without the infusion of funds that we gave them. >> representative chu i think i have time for one last question. you sent a letter to the head of the small business administration and to secretary -- treasury secretary janet yellen highlighting the disparity between loans to majority white neighborhood -- businesses white neighborhoods and black areas -- what was their response? >> we didn't get a response. so we are still looking forward to the response. but yes, an l.a. times study found that by looking at census tracks that those ppp loans in white areas got twice the number of ppp loans than in latino area, 1.5 times the loans in black -- and 1.2 times in asian
tracks. ao i showed the disparity. and we want to make sure that going forward the disparity is no longer andist. >> wonderful message to leave was. representative chu, thank you so much. that's all we have time for. >> thank you. >> i'll be back in a few moments. thank you. >> accessing capital is number one concern for all small businesses but for black owned
businesses, top three concerns. not just access to available credit but affordable credit. >> hundreds of years in the making and won't undo overnight but together we can undo them. welcome back to "washington post" live and our discussion of diversity in small businesses. i'm joined now by two people who want to be part of the solution. ron busby is the president of u.s. black chamber incorporated and lisa mensah. welcome both. >> thank you for having us. >> thank you. >> ron, you have been a personally very successful businessman growing from like 150,000 in revenue to 15 million over ten years.
what do you see as the biggest challenges facing minority-owned businesses right now? >> when we get surveyed by business and thank you for having us. we represent -- country in 42 states membership states over 385 thoulz black-owned businesses. and when we did a survey of our business members of what their concerns were, if you ask any small business owner they would say access to capital. same question to a black business own they were say number one two and three top concerns are access to affordable and available capital. so for us, capital is critical. we know that we get half of what we've gone in for and we've paid twice the rate for the same dollars that we received as our white peers. everything being equal, credit scores, balance sheets, profitability, even business plan. and so for black owned
businesses particularly in this period of time where we had so many challenges access to capital is going to be what is needed to kick start our economy for black business owners. >> yeah those are very striking statistics and bring me right to questions to you, lisa. your organization, your network has been around for 40 years. but it is all about bringing access to capital. can you tell me exactly how it works? and what you have done? >> thank you. and so good to be here. access to capital is critical. but who your lender is also matters. and that is what this pandemic has showed. your lender matters. this pandemic and now postpandemic time has put in the spotlight community development financial institutions. representative chu spoke about our work, and i'm proud to lead a network. we have 350 members of the thousands certified institutions. because as ron has said, it matters the kind of deal you get
from your lender. our community development lenders are lenders with a purpose, with a mission to support businesses, community facility, affordable housing and we want to give a fair deal. and we want to come with capital. but i call it capital plus. capital plus the support that can help drive a business. so we're not just there to make a buck. we're also there to make sure your clients succeed and succeed in some of the lowest income communities in the country. so to me your lender matters. and that's why its been so important for a relatively small network of community development financial institutions to be -- to have some focus and to have bigger partners. >> i'm hearing the term networking a lot. ron, your u.s. black chamber coordinates with 145 others i think across the country.
can owe tell me about the significance of that coordination and networking, what you are dealing with and how you help the other ones? >> great question. the u.s. black chamber was founded on what we call our five --. located here in washington, d.c., we understand the importance of being able to have an advocacy voice. so our pillars are started with advocacy, making sure we create policy that is favorable to black-owned businesses across the country. our second one access to capital. we're making sure it is available, it is affordable and as discussed earlier by lisa, that we're working with black-owned institutions as well as neighborhoods, financial institutions. we know that black banks and local banks make 70% of their loans to black owned businesses and homeowners. we have partner with -- to make sure that our businesses have access to capital.
around contracting and we really look at that from vantage points, where is the federal government spending its money? and we heard a lot about the stimulus package and infrastructure bill and we want to make sure black businesses are participating in this new economy. second, where is corporate america spending its money. and most importantly where are black people spending our dollars? we hear a lot about the trillion dollars black people have to spend but usually that is corporate america talking to us saying how can they get their share of it. we have to transform that conversation to keep the trillion dollars in our community and make sure behave sustainability. entrepreneurial training and development. and across the country we understand many of our businesses failed last year during the virus. and many were saying the reason why they went out of business is because of the lack of information that they were able to gain, to understand and to be
able to implement in their businesses. and so the u.s. black chamber who works with chambers across the country to ensure business owners and communities have resources, relationships to be able to continue to grow and --. >> lisa, ron talked about the significance of the pandemic. and you have said that it -- already seen in low income communities. we hear that. we know how low income communities were hard hit by the virus. but can you be specific about what you saw before, what was laid bare and how you move ahead from that? >> great. you know, what we know is that capital doesn't spread evenly. and so that's why cdfiss were formed. i spoke with other members. and they were telling me about the kind of clients they
support. a black woman owned medical practice that supports kids and families with autism. a community member couldn't get financing from other sources so this is what we see. and often what they are left with is some fairly loquacious priced capital sometimes. often we come along and finance them out of that kind of capital. now, this business was such a story of resilience. because she made it with a cdfi loan from true fund, she was able to get her cash floes in such a good state she could expand. and then the pandemic hit. and you can't provide therapeutic services in place. but the cdfis were there to pivot to make sure they could expand and this is what i think you asked about. what does recovery look like? we are here to make sure you are persist and then pivot. the persisting were the things we did, the financial first responder role of cdfis.
we got in quickly sometimes with modifications of loans, grant resources and with those very important ppp loans. that kept people able to persist. now it is a moment though for how are we going to get into this recovery and that is where again the cdfis are so important. there were many good things that happened. people took more advantage of social media presence and new technology. and so we are now positioned to help these businesses into the next segment. i feel like we do not have to give up. there were many businesses shuttered. but what we know is that our community, black communities, latino community, indigenous community, rural communities. this is where we need our small businesses to thrive. and i think what we know is that we can help those businesses to
pivot and to persist. >> again very inspiring, and ron, tell me what you believe. we have seen promising sign, certainly promising science for 20% i think of the businesses that shuttered. what do you think they need to take that next step and thrive? >> it would be great to hear. and we were extremely proud that the president of the united states went to tulsa, oklahoma, made the commitment that he was going to increase the spend with black firms from 5% to 15%. so often when programs are created to move the black business community, or black community forward, it is under the broad brush of minority programs for diversity and inclusion. we're not minorities. we're not many times small business owners. we have specific needs that are different from other communities, other business owners. and so what we are looking for
is intentionality when programs are created to ensure is that the businesses and the communities that we're impacting the most have the first opportunity to be able to participate and succeed. we saw that 70% of black businesses did not get a loan or payroll protection plan from a majority bank. 39% of our businesses either found that they were turned away altogether, 76% of them found they got either half or far less of what they needed. it is important for us to make sure that when we are talking about a resurgence or reopening of black business of america, that we have intentional programs to ensure that the businesses that were impacted have the opportunity to be sustained. >> thank you. lisa when we talk about these small businesses making it again, making it back. what impact can they have on the larger economy? what is the ripple effect here?
>> one of the most important questions of our day. this isn't just a clever fantasy that we're going to -- it's not just cute. these small businesses are fundamental to how our whole economy thrives. janet yellen spoke about unlocking the potential. we've got to get all parts of the economy back working. that's what rebuilding looks like. those are the ripple effects we need. we need the six jobs. we need the sole proprietors to work. and we need the smaller businesses that are bigger employers to also work. but i think the key thing is that this is what unlocking future potential looks like in a very sophisticated economy like the u.s. a lot works.
but when we leave behind communities and neighborhoods and tribal areas or rural areas, we're leaving, you know, opportunity on the side lines. and here is where our small businesses need investment. and this is again why the lender matters. and why it is important that we restore the lenders who have been out there fighting for these communities, until frankly this pandemic we didn't have a lot of people who knew what the acronym cdfi meant, community development financial institution. and now we see intentionality from the federal government, both suds of the aisle in supporting cdfi and frankly we've seen intentionality from private partners, those banks who have started to partner with --. and also new company have brought their resources and invested in u.s. and through us. so this is the time if we want
to get this economy rebuilt and to really address the wealth gap and the deeper inequality that has bedevilled american economy and society for decades. this is a route to doing that. and i think that's what's so important about this. we're finally recognizing this. >> ron, lisa is talk about the ripple effect economically. i'd love to have you talk about it culturally. a question i asked representative chu in a sense. what is the significance of success or failure for small businesses which are often underrepresented or marginalized communities. >> so many of our businesses are the core of their communities. also we have 2.6 million black-owned businesses around the country. 2. --. our cultural -- trifecta impact. we saw the virus impacted our
communities more so than any others and more black people died and were impacted at the same time were called essential workers. so that is the first leg of the trifecta. the second was the stimulus package itself that did not hit our community. when you have a program that is supposed to be able to move and jump start our businesses that takes out considerations 99% of our firms, it left us in a peculiar situation of not being able to continue to grow our businesses and third was all we saw was the murder of george floyd. for our culture it was a very challenging time. when we surveyed our member, 50% of them are still concerned about having access to capital to be able to grow, to reopen and to be able to get back in business. but we as a community have been saying before, we're a very resilient community. we understand the importance of making sure that we're being creative. and so you see businesses now
that are reopening and using technology. and most importantly what we're now seeing is a resurgence of the black dollar. corporations as well as black americans are saying we want to make sure we're supporting black-owned businesses and it has been a very difficult opportunity in the past because most of our businesses weren't certified as black owned. they were certified as minority owned businesses so the u.s. black chamber created the only certification program for many businesses around the country that aren't going to do business with the federal government and aren't large enough to do business with many of the corporations that historically have allowed certification programs. so for black-owned businesses and black consumers, you can find where we are at byblack dot u.s.
byblack.us. and we can find them and support them and grow our community as well. >> lisa i think we have probably time for a last question with you. and that is about keeping hope alive. you have talked, both talked about resilience. how would you sustain that feeling after what people have been there? >> one of the reasons our cdfis i think invest in small business, you can't look at an entrepreneur who comes to you with a business plan and not see the hope. this is all about investing in hope. and it is all about investing in second chances and people who have been incarcerated in the past. people who have been immigrants, people starting, mothers coming out of home life. they are starting businesses for a reason. this is one of the most american things i think we could do is to support the energy of entrepreneurs. and i think what it takes is a lender who will go the second
mile with a business owner. and that's our cdfis. we will listen. we will give you a fair deal. we will come with our capital and our business support. so that you can succeed through the many iterations. i know this about our 350 members. i know this about the --. and my sense of hope is that when a small set of institutions can get some very big partners, frankly this administration, the secretary of the treasury and new corporate partners, i feel hopeful that we won't waste this crisis and we will use it to come up with systems that are smarter and better to get the capital flowing in a fairer and more just way. and that is what gives me hope. >> ron busby and lisa mensah. i love finishing with that message of hope. thank you both very much for zwroing us.