A New CARES Act

Plan for
Immigrant &
Black-owned Businesses

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 “A racist policy is any measure that produces or sustains racial inequity between
racial groups. An antiracist policy is any measure that produces or sustains racial eq-
uity between racial groups. By policy, I mean written and unwritten laws, rules, pro-
cedures, processes, regulations, and guidelines that govern people. There is no such
thing as a nonracist or race-neutral policy. Every policy in every institution in every
community in every nation is producing or sustaining either racial inequity or equity
between racial groups.”

-Ibram X. Kendi (How To Be An Antiracist)

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Does the CARES Act Really
Care about Small Business?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was a $2 trillion
economic relief package approved by the U.S. Congress in late March 2020. This
plan was created to protect American families, small businesses, decrease unemploy-
ment, and provide economic relief to industries impacted by the Covid19 pandemic.
These programs were carried out by the U.S. Department of Treasury who was in
charge of creating an economic safety net for the American people.1 These programs
were designed to protect the economy while encouraging non-essential businesses and
workers to social distance and lower the spread of the disease. They were divided into
four core blocks:

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 Assistance for American Work- While these programs did protect many
ers and Families: Many Americans businesses from bankruptcy and layoffs,
can recognize this block as the one in there is evidence to suggest that they
charge of providing $1,200 impact pay- failed to effectively assist minority-owned
ment checks to taxpayers and Social Se- businesses during the pandemic.This fail-
curity recipients in April of this year. ure is reflective of the inequalities of the
American economy which systematically
Assistance for State, Local, and constrained Immigrant and Black-owned
Tribal Governments: This portion businesses from safely navigating the
of the program provided economic as- Covid19 crisis.
sistance to state, tribal, and local govern-
ments to assess the public health emergen-
cy and any other expenses they incurred
as a result of the pandemic. Also these
funds provided financial support to ac-
commodate teleworking remote learning.

Preserving Jobs for American

Industry: This program was an im-
portant part in keeping businesses afloat
and preventing unemployment during
the harsher months of the pandemic by
guaranteeing that employees remained in
a business’ payroll. It specifically provided
payroll assistance grants between March
13, 2020 through December 31, 2020.

Assistance for Small Businesses: This advocacy project attempts to high-

This program was launched in partner-
ship with the Small Business Administra-
tion (SBA) and provided loans through
the Payment Protection Protection Pro-
gram. The PPP Program was designed to
keep the workforce employed during the
Covid19 crisis. The funds could also be
used to increase online retail services and
shipping operations.
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light the disparities Immigrant and Black-
owned businesses face when applying for
grants, loans, and pandemic relief pro-
grams. In particular, it sheds light on
small businesses of the food industry that
were particularly impacted by limited ca-
pacity in restaurants and the transition to
takeout business operations in Washing-
ton DC.
Small Business & PPP Loans
Once lockdown orders were enforced, businesses were scrambling to find ways to
continue to operate without dine-in services. The service industry was particularly hit
the hardest during the pandemic because they rely on serving patrons. They were then
forced to rely on apps like Uber Eats, DoorDash, and Postmates which charged deliv-
ery commissions between 15% and 35% to deliver orders. Businesses were drowning
with debt, new expenses due to the pandemic, lower sales, and salaries to pay. Once
the CARES Act was passed, many businesses were hopeful these grants and loans
would help them survive the pandemic. However, the definition of “small businesses”
is larger than one might think. According to the Code of Federal Regulations2, food
services that fall below $ 8 million are considered a small business. As soon as PPP
Loans were being disbursed, controversy arose when chains like Shake Shack received
large amounts of funds from this program, while thousands of micro business owners
were struggling to get their applications approved.
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Rafael Dario Berti
Venezuelan Immigrant & Owner of Arcay Chocolates
“ When the pandemic hit, we were very scared. We had “ Applying for PPP Loans was especially hard for mi-
just opened our first retail location and then we had
to shut down our whole operation. We had loans for
construction and equipment we needed to pay off with
no income coming in from customers. We applied to
the PPP loan and the loan forgiveness program through
the SBA. It was a long and exhausting process. We were
drowning in paperwork in English - which is my second
language - with long lists of requirements we needed to
complete in order to get the loans disbursed. We were
able to receive the PPP loan and now we can continue
doing the work we love which is making chocolates. But
reopening has been a hard time too. We had to invest
in plexiglass barriers and PPE gear to keep our custom-
ers safe. But still, customers are scared of coming to
the shop so foot traffic has diminished significantly. Also
we had to reinvent our whole business operation to sell
chocolates online. All of this was very expensive and it’s
been tough to get back on our feet. I hope that there
will be a second round of financial assistance for small
businesses like us, otherwise we might not survive. ”
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Testimonials
Milena Guro
Peruvian Immigrant & Owner of Milena Guro Designs
crobusiness owners like me because many of us don’t
meet the requirements and qualifications to receive aid.
I preside over the National Association of Craftspeople
in the U.S., and I oversee the fair treatment of craft
makers in the Washington Metropolitan area. Some of
the craftspeople I work with would call me desperately
to help them with the PPP loan application. The forms
to apply would ask for at least 2 years of tax returns,
and many business owners were newly established
businesses so they didn’t have these documents. Many
of them didn’t get any assistance filling out the forms
because the system was overwhelmed with applicants
and they lost the opportunity to apply. Also without an
authorized immigration status they could not apply to
State or local grants or even unemployment benefits.
Our government should do better to protect us, we con-
tribute so much to the American economy. ”
Reopening Requirements
Reopening meant that businesses need-
ed to comply with a long list of rules set
by the CDC and local government. In
Washington DC, businesses had to ac-
quire plexiglass protective shields (sneeze
guards) and limit their dine-in capacity to
50%. The DC Mayor’s office managed
to cut the red tape and expand permits
for outdoor seating, but with the winter
months ahead many businesses will see a
decline in customers. They rolled out a
plan to “winterize” outdoor seating, but
not all who applied received funds.

According to Washingtonian Maga-

zine:
DC is doling out $4 million to help
businesses winterize their outdoor dining
spaces in anticipation of the potentially
devastating season ahead. Already, how-
ever, there’s a waitlist for the $6,000 “Win-
ter Ready” grants, which can be used to
cover the costs of new tents, heaters, pro-
pane, lighting, furniture, and advertising.
The city received enough applications
to exhaust the allotted funds within three
weeks of the program opening. Condi-
tional award letters have been sent out
to 323 businesses so far, and applications
will continue to be reviewed through the
end of October.
Pending funding availability, DC will
open the grant back up.3
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 Winterize DC

New tents and seating outside Ben’s Chili Bowl in

U Street NW Washington DC.

Heaters and expanded terrace at La Cosecha in

Union Market DC.

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 The Middleman
to the Rescue?

According to The Brookings

Institution:
The PPP initially relied on traditional banks to de- Small businesses in majority-Black neighborhoods
liver loans, which favored existing customers at large were also more likely to apply for their loans from fin-
banks and disfavored microbusinesses (businesses with techs or online lenders (Chart 3B). Importantly, fintechs
fewer than 10 employees), non-employer businesses, and many other online lending companies were not al-
and Black- and Latino- or Hispanic-owned businesses lowed to distribute PPP loans until April 14, after the
(which all tend to be unbanked or underbanked). This first round of funding was almost depleted.
disparate access has been hard to measure directly be-
cause PPP loan-level data provided by the Treasury De- The Federal Reserve found that online lenders have
partment does not consistently report the race and eth- less favorable interest rate and repayment terms com-
nicity of the loan recipient. However, the database does pared to traditional banks. And many online lenders
provide the ZIP code, loan approval date, and lender remain largely unregulated, leaving borrowers without
for over 5 million borrowers, creating a comprehensive sufficient consumer protection.4
picture of small business capital access at the neighbor-
hood scale. According to Market Watch:
Even before the pandemic, Black business owners,
Neighborhood racial composition can be a useful compared to their white counterparts, more often had
angle to investigate the PPP’s reach, as previous re- to use their own money instead of a business loan.
search finds that the racial and ethnic composition of
a neighborhood is related to small businesses’ liquidi-
ty and profitability. Prior to the COVID-19 pandemic,
the JPMorgan Chase Institute found that businesses in
communities of color were the most cash-constrained
but the least likely to have existing relationships with
large banks.

In Washington, D.C., for example, PPP loan receipt

dates follow a clear racial and spatial pattern. Small
businesses in majority-Black neighborhoods, including
those south and east of the Anacostia River, waited 37
days for their PPP assistance on average—10 days lon-
ger than small businesses in majority-white neighbor-
hoods (Chart 3A).
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 Joseph Leonardi 2020

They also usually received smaller amounts than they were seeking, according to the Federal Reserve Bank of
New York’s 2019 Small Business Credit Survey.

The number of active Black-owned businesses declined by an estimated 41% from February to April. There
were almost 1.1 million active Black business owners in February and nearly 640,000 in April, University of Cal-
ifornia at Santa Cruz economist Robert Fairlie previously projected.

During that same period, the number of white-owned businesses declined 17%, from 10.5 million to 8.7 million,
Fairlie said. There was a 22% national average decline across all demographics.5
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How We Can Care
There are many ways we can care about Immigrant
and Black-owned businesses. First off, we need to sup-
port their businesses by consuming their products, fol-
lowing their businesses on social media, and sharing our
experiences with their services online.

We can be conscious consumers and pick where we are

spending our money, and Immigrant and Black-owned
businesses need us the most right now. As of December
8th, 2020, 73 restaurants and bars have shut down their
operations. More businesses are soon to follow.

Yet the responsibility to care about small businesses

-restaurants and bars in particular- does not lie solely
in our hands as consumers. The U.S. Congress is work-
ing on passing the “Real Economic Support That Ac-
knowledges Unique Restaurant Assistance Needed To
Survive Act of 2020 or the RESTAURANTS Act of
2020” (H.R.7197 — 116th Congress (2019-2020).6
This bill would “provide funding for the Restaurant Re-
vitalization Fund, from which the Department of the
Treasury shall make grants to eligible food and bever-
age purveyors to cover specified costs.”

This advocacy project was made in support of this

bill, however, there is an important provision that needs
to be addressed. The Department of the Treasury needs
to expand and expedite funding through FinTechs and
online lending companies, which as mentioned earlier
in this project, are the main lenders of Immigrant and
Black-owned businesses.

The Covid19 pandemic and the murder of George

Floyd sparked a new reckoning of systemic racism in
America. To address the disparities that impact our
community, we need to look at our policies and seek
ways to make them equitable among racial groups.

Therefore, the “RESTAURANTS Act of 2020” will

only be equitable if it addresses the access Black and
Immigrant businesses have to financial institutions.

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 Bibliography

1. The Department of The Treasury, “The CARES Act Provides Assistance to Small Businesses”
from, https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

2. Electronic Code of Federal Regulations (2020, December 4).

https://www.ecfr.gov/cgi-bin/text-idx?SID=0ff5f0839abff4eec707b4478ed733c6&mc=true&node=pt
13.1.121&rgn=div5#se13.1.121_1201

3. Sidman, J. (2020, September 21). DC Will Give Businesses $6,000 Grants to Winterize Their
Outdoor Dining Spaces. Retrieved December 08, 2020, from https://www.washingtonian.
com/2020/09/20/dc-will-give-out-6000-grants-for-businesses-to-winterize-their-outdoor-dining-
spaces/

4. Liu, S., & Parilla, J. (2020, September 18). New data shows small businesses in communities of
color had unequal access to federal COVID-19 relief. Retrieved December 08, 2020, from https://
www.brookings.edu/research/new-data-shows-small-businesses-in-communities-of-color-had-
unequal-access-to-federal-covid-19-relief/

5. Keshner, A. (2020, August 11). Coronavirus pandemic is closing Black-owned businesses at an

outsized rate - but the next stimulus bill could help. Retrieved December 08, 2020, from https://
www.marketwatch.com/story/the-coronavirus-pandemic-is-closing-black-owned-businesses-
at-an-outsized-rate-the-next-stimulus-bill-could-help-correct-the-problem-fed-researchers-
say-2020-08-05

6. Congress.gov, Summary: H.R.7197 — 116th Congress (2019-2020). from https://www.con-

gress.gov/bill/116th-congress/house-bill/7197?q=%7B%22search%22%3A%5B%22restau-
rants+act+of+2020%22%5D%7D&r=1&s=2

University of Maryland College Park

COMM 330 - Dr. Jade Olson
Anabella Berti
December 8th 2020
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