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03/17/14- Roland Martin talks to Ron Busby, CEO of the US Black Chambers Inc. Reports show that black owned businesses only get 1.7% of the $23 billion available in loan money from the small business administration under President Obama. “There are 1.9 million black owned business and 1.8 million of those have no employees,” Busby says.
2 thoughts on “Ron Busby: Only 1.7% of $23 Billion SBA Loan Given To Black Businesses”
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This is a symptom of a much broader problem with the SBA, which is that they no longer do much lending at all to small businesses with 1-19 employees. They have left small business behind, and black businesses are largely 1-19 employee businesses as well. Here’s the real issue:
1) In 2009 every major bank in America took away the credit lines of every single business under $1million, without regard to their credit worthiness, and without notifying any of them – it was a middle of the night move (check w/ Dave Rader, head of Wells Fargo SBA Lending). And then after those millions of businesses turned to their personal credit lines to fund ongoing business, their rates were jacked to 12-20% while the banks enjoyed the lowest federal interest rates in history. 28 million businesses – 98% of all employee and non-employee businesses – have 1-19 employees. These 98% were devastated by that act. Almost all black-owned businesses are part of the 98%.
2) The 98% need loans of $50,000 to $250,000. In 2008 the average SBA loan was $182,000 and 24% of them were under $100,000. Today the average SBA loan is a bloated $485,000 and less then 9% of loans are under $100,000, and declining
(check w/ Terry Sutherland, SBA Press Office). All businesses with 1-19 employees have experienced drastic reductions in loan availability. The reduction in black-owned lending reflects the same thing every other small business is experiencing – the SBA doesn’t lend to small businesses anymore.
3) The SBA is giving a lot FEWER loans, but all of it is going to big businesses (see #2 above). Why?
Because from 2008 through today the SBA has been proactively and aggressively expanding the definition of “small” to now include tens of thousands of very large corporations with $30+million and 500+ employees. As a result, the SBA and the banks are writing fewer, much bigger loans to very large companies, and still claiming they support small business.
These three facts are at the core of the black-owned lending problem, and why we have had the slowest recovery in American history. All small business owners of every background should be just as concerned. The SBA has left all small businesses behind.
How many of those businesses meet the qualifications/requirements for an SBA loan?? Report those numbers, then compare and contrast the data.