Article by Ashley Portero, South Florida Business JournalAn executive at one of the nation's largest Black-owned banks shared some insights onwhy some small businesses struggled to gain access to Paycheck Protection Program loans.Teri Williams, president and COO of Boston-based OneUnited Bank, said her institutionreceived a large number of PPP applications from South Florida businesses. OneUnited has abranch in Miami, its only location in Florida. "We had more applications from Florida thanMassachusetts," Williams said. "I think it's because Miami is home to so many startups andsmaller businesses. In Massachusetts, a lot of people work for bigger corporations."The $656 million asset bank began accepting PPP applications during the program's secondround. The average loan was $50,000, Williams said. Although the application deadline for the federal program was extended to Aug. 8, the bank stopped accepting applicationsJune 30.Williams said many of the businesses that qualified for the program had alreadyapplied by the end of June. OneUnited continued to receive applications throughJune 30, but the quality of the applications degraded with time. "We started to see a lot of businesses that didn't qualify, or didn't have the documents required to apply for a loan," she said.The documentation issue was a major barrier for small businesses, particularlymicro-businesses with fewer than 10 employees, Williams said. Many applicationsthe bank received were missing tax returns, payroll information and other keydocuments needed for approval. In some cases, the smallest businesses werenever able to gather the required paperwork, even after consulting with the bank.Williams suspects many small businesses, including Black-owned enterprises, werenever approved for a PPP loan because they didn't have the documents to supportan application. That could contribute to reports that say minority-ownedbusinesses are less likely to receive a loan, she added."A lot of these really small businesses are great at the front end, they know how tomake money and serve customers, but they're not as strong with back-officeoperations like accounting and keeping track of paperwork," she said.That challenge existed prior to Covid-19. But the PPP application process amplifiedthe issue, Williams added.Surveys and anecdotal reports indicate minority-owned businesses received fewerPPP loans than their white-owned counterparts.In one mid-May survey from Global Strategy Group, only 12% of Black and Hispanicbusinesses received a loan even though 51% had applied. Meanwhile, 41% said theyhad been rejected for a loan.The SBA recently said it is legally unable to require applicants to submitdemographic data as part of the $659 billion forgivable loan program, making itdifficult to determine whether Black, Hispanic, Asian, Native American and women-ownedcompanies are being shut out from loans.Lia Yaffar, interim director of the Community Fund of North Miami Dade, agreedwith Williams assessment that collecting documents was a big challenge for smallbusinesses."It showed us there's a need [to provide] a higher level of structured assistance tothose business owners," she said.The Community Fund of North Miami-Dade is a community development financialinstitution, which offers financial services in low income or underserved markets.The fund is affiliated with the Opa-locka Community Development Corporation.Miami has more minority-owned businesses than any U.S. metro aside from SanJose, California, according to the FIU Metropolitan Center. Thirty-seven percent ofMiami businesses are minority-owned, compared to 18% in the U.S., the centerreports.Like many small banks, Williams said OneUnited won new clients through the PPPprocess. But she added the Black Lives Matter movement brought more newcustomers to the bank. Branches have been "packed" with people lining up to openaccounts in recent months."I think customers are reacting to the national conversation about racism andseeking us out," said Williams, adding that the growth in new accounts is not tiedto any specific marketing strategy. "I think a lot of people want the comfort ofbanking with a Black-owned institution right now.
