Black and Brown communities rarely get the attention they need. From denied loans to a lack of health care options, these communities constantly see the system work against them.
Furthermore, COVID-19 has shined a spotlight on the issues the Black and Brown communities face. In this article, we will break down the main points of this topic, starting with the story of inequality and then looking at the pandemic.
Don’t worry, though. It’s not all doom and gloom. We will also go over the incredibly huge resiliency of these communities and some ways you can get on solid footing during and after the pandemic.
We covered this topic on episode six, “Impact of COVID 19 on Black and Brown Communities,” of our podcast, Fundamental Fairness.
The Black and Latino Communities: A Story of Inequality
Black and Brown communities have spent generations trying to bridge the equality gap. While wealth has surged for white people, the same hasn’t been true for Black and Brown communities.
Consider the historical wealth of black and white people.
In 1968, a typical middle-class white household brought in $70,786, while the typical Black household earned $6,674. Flash forward to 2016, where the median earnings for a white household were $149,703, and the median earnings for a Black household were $13,024.
The earnings gap is due to systemic inequality.
Inequality is not exclusive to earnings; it is also found in education, loan access, job opportunities, and more. While this has always been a problem, the issue’s been highlighted due to the COVID-19 pandemic.
COVID-19: The Pandemic and Its Impact
Due to the historical inequality, it’s not a surprise that Black and Brown communities were hit hardest during the coronavirus pandemic. Latinos and Black adults suffered up to three times the financial hardship of white Americans.
According to the Pew Research Center, in April, 61% of Hispanic Americans and 44% of Black Americans said that someone in their household had lost a job or wages because of the COVID-19 pandemic.
Making matters worse, Latinos and Black Americans have been shuttering their business doors at record rates.
According to the study Double Jeopardy: Covid-19’s Concentrated Health And Wealth Effects In Black Communities, between February and April, there has been a decline in active business ownership of 41% in the Black community.
It hasn’t been easy for Latino-owned businesses, either. According to the study The Ongoing Impact of COVID-19 on Latino Owned Businesses by Stanford Graduate School of Business, practically 1 out of 4 surveyed Latino-owned businesses experienced closure.
That decline is holding steady, in part because of the health impact of COVID-19 on Black and Brown communities. Both communities face increased illness and death.
As long as the people in these communities keep getting sick at high rates, it will be hard for businesses to recover on their own.
Finding Relief During a Pandemic
The government attempted to save businesses with the paycheck protection program (PPP). While the program looked good on paper, business owners quickly saw the problem with it.
First, these loans were very hard for Black and Hispanic-owned businesses to get. Only 12% of applications for Black and Hispanic owners were approved.
- According to the Stanford study mentioned earlier, Latinos were approved for this program at half the rate than White-owned businesses: 10% compared to 17% approval rate.
- Double Jeopardy reveals that there were coverage gaps that hit the Black community hard.
Why is this?
This may correlate with prior banking relationships: PPP loans were not given out more in places that were hit hardest by COVID, but in places where people had prior banking relationships that facilitated the process.
What about the relationship between Latino and Black Americans and the banking industry? Did that hurt their chances of getting a loan?
To put it simply: Yes.
There aren’t as many banks in non-white neighborhoods.
- If you live in a majority-white county, you probably have around 41 financial institutions for every 100,000 residents.
- Now, let’s say you live in a non-white majority county. The number of institutions drops to an average of 27 for every 100,000 people.
The lack of banks isn’t’ the only problem. You’re more likely to get denied for a loan if you’re Black or Hispanic. That’s true, even if you have a solid credit history.
With facts like these, it’s easy to see why COVID-19 has hit Black and Brown communities the hardest.
Right now, your head is spinning with all the problems out there.
The system doesn’t seem very fair for Latinos and Black Americans.
Fortunately, some solutions are already in place, and more will come in the future. Equality doesn’t happen overnight, but people are laying the groundwork for a better future for Black and Brown communities.
It’s critical to leverage the existing banking and lending infrastructure to reach and help Black and brown communities so that they have the same access to aid and the same opportunities to thrive.
Fortunately, some CDFIs and lenders, such as Camino Financial, are already doing so. They specialize in small business loans for minorities and strive to even the playing field for Black and Brown communities.
Work is also being done to improve health care in Black and Brown communities. The government is also exploring ways to help small businesses meet the sanitization and PPE demands without losing money.
Get Your Business Back on Solid Footing
While things might be hard for minority-owned businesses, they have proved that they are resilient and will fight to stay afloat, despite the lack of financial help they’ve received. According to the Camino Financial Latino Small Business Survey, as of August, 78% of Latino-owned businesses have re-opened, and 70% believe their business will survive or even go back to where they were pre-pandemic.
Business owners in Black and Brown communities are incredibly strong and, with proper help from the government, they can thrive and help the economy.
Listen to our Podcast, Fundamental Fairness, episode 6: “Impact of COVID 19 on Black and Brown Communities.”