While Black entrepreneurs have complained about problems with the Small Business Administration’s financial assistance programs owners and advocates of Black banks say they could be a help and a resource of information and capital for Black firms during the coronavirus pandemic.
“We are committed to helping Black businesses during this pandemic,” said B. Doyle Mitchell, president and CEO of Industrial Bank. “If one of our customers is experiencing a hardship during this time, we can offer them a deferred payment plan that can last up to 90 days. The deferral can be on the principal or the interest or both, on a loan.”
Industrial, originally founded in 1913 and reorganized by Mitchell’s grandfather Jesse in 1934, is the only Black bank in the District, with branches in Prince George’s County and New Jersey as well. Mitchell said his bank offers the Small Business Administration’s Paycheck Protection Program (PPP) that loans businesses money to keep their employees on the payroll and other expenses. If the business fulfills the requirements of the loan, it will be forgiven.
Mitchell said Industrial has worked on a number of PPP loans since the program started in April.
“At this point, we have processed 250 PPP loans,” he said. “We have worked with $30 million in the pipeline. Some of the applications were done in early April in the first round but mainly in the second round that started in late April. The deadline to apply for the second round was May 4 but we are looking forward to working with the PPP if Congress funds it for further rounds.”
Mitchell said complaints voiced by some Black entrepreneurs who approached big banks for funds and did not receive the response they expected had validity but said generally that’s how financial institutions operate.
“You have to look out for your customers first,” Mitchell said. “That is the mentality of the big banks and most banks in general. If you have a loan with the bank, you would have likely been processed a lot quicker for the PPP than even a customer who had a deposit or a credit or debit card. The truth is the bigger banks didn’t want to process smaller loans from smaller businesses such as mom-and-pop operations. That is why Black and community banks are so important. We are the ones doing the small loans and we are willing to take in non-customers more quickly than the big banks.”
Kenneth Kelly serves as the chairman of the National Bankers Association (NBA), the trade association for Black banks of which Mitchell through Industrial belongs to, and leads the First Independence Bank in Detroit. Kelly agrees with Mitchell on why Black entrepreneurs had trouble getting PPP loans but mentioned others reasons also.
“Black entrepreneurs have to understand that banking is a heavily regulated industry,” Kelly said. “To do business with a bank, it is best to have a documented relationship. Banks have to know who that customer is, they just can’t give out money. If the bank doesn’t have evidence of who the customer is that could be a violation of regulations. As a result, many banks only deal with who they know. To the bank, the important thing is whether this business has a loan with me, not just a deposit?”
Kelly said many NBA members process PPP loans and works with organizations such as the NAACP, the National Urban League, the U.S. Black Chambers Inc., and the National Business League to educate Black entrepreneurs about the Small Business Administration programs. He said the NBA has engaged Treasury Secretary Steve Mnuchin about the PPP “and he has been very responsive to us.”
“He wants to know what are the issues on the ground and what is going on,” Kelly said.
Both Mitchell and Kelly stress that the mission of Black banks is to help African Americans with their banking needs.
“The PPP process taking place during this pandemic shows why it is important for small and Black businesses to deal with Black banks,” Mitchell said. “We are here for our customers.”
Source https://www.washingtoninformer.com/black-banks-will-help-firms-through-pandemic-leaders-say/
