So get this straight: While the economy is relatively booming and the number of Black-owned businesses is skyrocketing (now about 7 percent of the total number), federally backed loans to support the growth and development of these businesses is not just shrinking, it’s practically disappearing. To be blunt, that’ shameful.
But we have not been idle in the face of these disturbing figures.
The U.S. Black Chambers, Inc. has forged a relationship with the National Bankers Association that resulted in $5 million being deposited into Black-owned financial institutions. We also supported Maria Contreras-Sweet’s confirmation as the new administrator of the U.S. Small Business Administration.
We believe that Administrator Contreras-Sweet, who founded ProAmerica Bank in Los Angeles, not only understands the challenges facing Black businesses. Our conversations with her lead us to believe that the shrinking numbers of loans to African-American businesses troubles her, too, and that she will immediately go to work to make improvements.
During her recent confirmation speech, Administrator Contreras-Sweet declared that one of her top priorities would be to ensure that sufficient funding would be granted to the hardworking minority businesses that need it the most. We support utilizing innovative, non-traditional avenues of lending money to minority firms to guarantee success. Continuing the same-old strategies of asking banks to lend to Black firms and expecting a different outcome is the very definition of insanity.
Among our recommendations made to Contreras-Sweet: Enforce Section 342 of the Dodd-Frank Act. This provision of the Wall Street Reform Act, authored by California Congresswoman Maxine Waters, contains little used (and more rarely enforced) provisions governing the activities of financial institutions and the federal agencies that oversee their operations.
If enforced, Section 342 would fit the description “Community Reinvestment Act On Steroids.” In a nutshell, if a bank’s hiring practices, procurement policies and lending performance don’t demonstrate their commitment to a level playing field, (at least on paper) that bank can’t—or shouldn’t be allowed to—borrow money from the Federal Reserve.
If a bank can’t borrow money cheaply, it can’t lend money at a profit. If a bank doesn’t make a profit, it’s either declared insolvent and goes out of business, or it’s bought by another, bigger bank. Unfortunately, it seems some banks would rather face the prospect of insolvency or takeover than lend money to a Black-owned business.
(Ron Busby Sr. is president and CEO of U.S. Black Chambers, Inc. For more information about the U.S. Black Chambers, go to www.usblackchamber.org.)