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Survey: Minority Owned Small Businesses Overlooked By Federal Relief Programs

LOS ANGELES (CBSLA) -- Ruben Guerra's small construction business in Montebello has been turned upside down.

"Those employees I had to pretty much let go because I can't use them anymore," he said. "There's no work right now."


Guerra applied for a loan from the Small Business Administration, but to no avail. As the president and chairman of the Latin Business Association, he said he's been hearing similar stories from other Latinx business owners.

"A lot of the companies that we're talking to...have actually been complaining [and asking], 'What do we do?'" Guerra said. "They're all asking where to find help."

Shawnetta Faust said she applied for a loan through the paycheck protection program back in April for her company, Faithful Moving and Storage, but she has not received enough financial help so far.

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"It seems like just a run around," she said. "This is our only source of income, so it means either mom and dad need to look for another job so that we can still maintain the lifestyle that we live or...something's gotta give."


Last week, her bank informed her she'd been approved for a $42,000 loan. However, this week, she received a check for only $7,500 with no explanation or guidance. She said she fears for the future of her company if she does not receive relief soon.

"I don't know if we'll still be business owners after this," she said.

Faust's and Guerra's struggles are being echoed nationwide. A recent survey from UnidosUS — a Latinx advocacy group — found that only 12 percent of African American and Latinx business owners received the full amount of relief money they requested. About 38 percent of African American and Latinx business owners received some amount of relief, but less than requested and far less than the national average for all businesses.

"Black and Latino businesses do not have access to capital [or] relationships with our banking system the way that the mainstream business community does," said Rafael Collazo, who helped run the study for UnidosUS. "Seventy percent of Latino businesses start with their own personal savings. So, this was the first time for many businesses, even fairly successful businesses in our community, had to engage a bank in applying for a loan."

minority loans

Congress directed the SBA to prioritize underserved communities, including minority and women-owned businesses. However, investigators with the SBA found that the agency "did not provide guidance to lenders on how to do that...and recommended the SBA begin collecting...demographic information" to track the disparities.

In a virtual hearing this week, senators urged Treasury Secretary Steven Mnuchin to do more.

"Small minority businesses are the life blood in those small, rural communities," said South Carolina Senator Tim Scott.

Recognizing the massive need, a familiar face is on its way to being some help. Lakers legend Magic Johnson's company teamed up with some private lenders to offer $100 million in loans directly to minority owned small businesses.

"These are incredible small businesses that have been the pillar of our community and also employ a lot of black and brown people," he said.

This is welcome news for business owners like Ruben Guerra, who is urging small business owners to reach out and help each other.

"We can't count on the SBA. We can't count on the county. We can't count on the state," he said. "We need to count on each other to help each other."

While many big companies are receiving millions in federal relief money, most of the companies mentioned in the UnidosUS survey said they're asking for less than $50,000 to stay afloat.


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