La Opinión, Editorial, Staff, Posted: Dec 21, 2009
The initial results of a program specially created six months ago as part of the economic stimulus package to help small businesses (ARC or America’s Recovery Capital) are not very promising. Minority businesses are not getting their fair share and the reason why this is happening must be reviewed.
ARC provides guarantees to banks for them to make loans of up to $35,000 to small businesses hit by the recession under very favorable terms, including no payments for one year. An investigation by New America Media found that only 3 percent of the loans ended up in the hands of Latino businesses and 1.5 percent for African-American businesses. Another 3 percent went to Asian businesses. We know that 5 percent of small businesses are African-American and 7 percent are Latino-owned, so the figures do not reflect equitable shares of such an important program that helps sustain so many families in these hard times.
In some states, there were no loans to minorities. In Nevada, where the Latino community is experiencing phenomenal growth, only one loan was granted to a minority-owned business.
Community leaders are demanding an explanation and they are entitled to one. The stimulus package money comes from taxpayers and the banks are not assuming any risk at all with these loans, so the government should ensure that access to the program is equitable. It may have been smarter to have granted the loans directly through the Small Business Administration (SBA) rather than through the banks, which tend not to want to disclose how and why the make their decisions, even when they receive taxpayer assistance.
The program must be reviewed and measures must be implemented to facilitate access for minorities who, in many cases, are the main economic pillars of their communities.
