Monday, April 27, 2020

Amicus Brief in Paycheck Protection Program Case (20-1438)

WASHINGTON - April 27, 2020 - PRLog -- The U.S. Court of Appeals for the Fourth Circuit today posted a "Friend of the Court" brief filed by William Michael Cunningham in Profiles, Inc. v. Bank of America Corporation. The case, 20-cv-1438, requests an injunction to stop Bank of America from limiting Paycheck Protection Program (PPP) applications. According to news reports, "Bank of America initially would only accept paycheck protection loan applications from small business clients that were active borrowers at the bank."

Our brief explains why the bank would impose such restrictive and limiting conditions on the allocation of public funds in the middle of a national crisis. We include data from our new national survey of small businesses launched on Thursday, April 23rd  on the Paycheck Protection Program and the Economic Injury Disaster Loan Emergency Advance (EIDL) Program. The survey is intended to get a true picture of how effective the lending programs have been. See:

The Court has not formally accepted the brief.

According to news reports, "Baltimore-based public relations firm Profiles Inc. and several other small businesses are suing Bank of America Corp. and its national bank subsidiary, accusing the bank of wrongfully limiting access to the Paycheck Protection Program, which seeks to provide stop-gap funding to help small businesses keep workers employed during the COVID-19 pandemic."

Mr. Cunningham's brief focuses on the economic impact Bank of America's policies have on minority communities, specifically African American communities. The brief highlights the way the banking industry has changed over the past 30 years, and the impact of that change on minority communities.

The brief concludes that the PPP program was designed to distribute capital broadly, without reference to status as a customer of a specific bank.

In his Friend of the Court brief, Mr Cunningham shows that increased concentration in the banking industry has led to increased profits, a decline in service and increased risk. We conclude that the bank's behaviour in this case exhibits the same ruinous ethical standards that led to the financial crisis of 2008.

See our video on the EIDL Program:

Friday, April 24, 2020

Black American Business Owners Sound Off in New Survey of PPP

Black American Business Owners Sound Off in New Survey of PPP 

by Jeffrey McKinney, Black Enterprise Magazine
April 24, 2020

Financing from the Paycheck Protection Program (PPP) is getting a cool reception from black business owners.

A new national survey of 50 small businesses conducted Thursday by Washington, D.C.-based Creative Investment Research on the Paycheck Protection Program and the Economic Injury Disaster Loan Emergency Advance (EIDL) Program was intended to get a true pulse of how
effective the lending programs have been.

The survey came out the same day the House rati􀁽ed a bill by the Senate to pump roughly $310 billion more in loans to the Paycheck Protection Program, The Wall Street Journal reports.
The PPP exhausted its initial $350 billion funding last week after being rolled out on April 3. The program for 􀁽rms with up to 500 workers became law in late March as part of the $2 trillion coronavirus economic stimulus package. It was geared to help small companies cover payroll and other key operating costs. Loans can be forgiven if businesses retain the size of their workforce.
Some $60 billion of the new funding will go to small and medium-sized community lenders, addressing concerns of some black small businesses and churches about landing funding. About $60 billion will be directed to the EIDL Program, which also has drained its initial funding.

William Michael Cunningham, an economist and banking expert who runs Creative Investment Research, said the survey was conducted after reports of large businesses receiving funding intended for small businesses that have been closed or otherwise affected by the coronavirus pandemic. He says the analysis is the first of its type with 91% of survey respondents being black Americans.

The report revealed that out of the 60% of survey respondents who applied for the PPP program, 33% got some level of funding. Yet, Cunningham noted one respondent commented that he “received 1/12th of the amount I asked for.”

When it comes to the EIDL Program, of the 72% of the survey respondents who applied, 28% got some level of funding. His firm is continuing to conduct the survey, so the results may change as new survey responses arrive.

All told, Cunningham says the performance of both programs is better than popular opinion would lead us to expect. He added part of the reason for the higher than expected participation in the two programs may be due to a self-selection bias; most of the people who responded did so after his firm posted the survey link during a webinar on the PPP and EIDL Programs sponsored by the NAACP.

“What was surprising was the number of firms that applied and got some funding, even though it was not as much as they needed or wanted,” Cunningham says.

Most of the survey respondents were located in Baltimore, Maryland; Nashville, Tennessee; Virginia Beach, Virginia; and Washington, D.C. Other cities included ranged from Philadelphia to Indianapolis to Denver to San Jose, California to Tampa, Florida. Some 83% of respondents had one to six employees. In terms of representative industries, most respondents were in healthcare (12.5%), followed by construction and consulting, both 8.3%. Churches represented 4.2% of respondents.

Cunningham shared comments from the survey that included:

“It was a challenging process; our accountant spent a lot of time with the system crashing, the bank not being ready to receive applications, waiting and waiting until we realized we needed to follow up with our bank’s relationship manager, who is African American—that’s when we saw movement and response. Prior to that we were flying blind. At the very last minute we had to submit board minutes [for] approval the loan, which was not part of the SBA application or the bank application process. Even when you have your documentation, it can take a long time to submit the application.”

“We contacted our bank several times to find out what information we needed to provide in the application process and have never got a response back.”

“As a small business I did not want to borrow. I have a friend who works at SBA and only recently did he tell me to apply because most of the loan may be forgivable. That’s important to note.”

“I have been waiting to hear from SBA to find out the status of my EIDL application. I applied on 4/2/2020, and still do not know if my loan was approved as of 4/23/2020.”

“No longer in business…. help those that are! It’s hard out there to survive! I work for UPS now.”

Looking ahead, Cunningham contends information in this survey is significant with respect to the new round of PPP funding because, used correctly, it can help make the PPP better. He added it can help make sure that PPP resources reach black-owned businesses. He suggested that civil rights organizations conduct their own surveys.


Tuesday, April 21, 2020

Paycheck Protection Program Increase

Today's addendum to the CARES Act includes the following:

Section 101 provides amendments to the Paycheck Protection Program and to the Economic Injury Disaster Loans, and Emergency Grants.

The agreement increases the authorization level for the Paycheck Protection Program from $349 billion to $659 billion, and increases the authorization level for the Emergency Economic Injury Disaster (EIDL) Grants from $10 billion to $20 billion.

See our video on the EIDL Program: (As we said in the video, you will want to document your EIDL and PPP applications. We still feel this program will have a hard time reaching women, Black, Hispanic and Asian small businesses. It has also been shown to provide more loans to red states than blue.)

The law also creates a set-aside for Insured Depository Institutions, Credit Unions, and Community Financial Institutions for the Paycheck Protection Program. It defines Community Financial Institutions as minority depository institutions, certified development companies, microloan intermediaries, and State or Federal Credit Unions. (Certified Development Companies (CDCs) are nonprofit corporations certified and regulated by the SBA, that work with participating lenders to provide financing to small businesses. There are 270 CDCs nationwide.) This section sets aside the following amounts for the Paycheck Protection Program to be made by the following institutions:

$30 billion for loans made by Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion; and

$30 billion for loans made by Community Financial Institutions, Small Insured Depository Institutions, and Credit Unions with assets less than $10 billion.

Small businesses should apply for both the EIDL and PPP Programs if they have not done so already. You should also immediately reach out to Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion. Of course, you will want to reach out to Community Financial Institutions, Small Insured Depository Institutions, and Credit Unions with assets less than $10 billion.

For a list of all banks, see:

For a list of all credit unions, see:

For a list of all Community Development Financial Institutions in the US., see:

(Data from 2015).

We offer business consultation specifically focused on the needs of businesses during the COVID crisis. See:

Monday, April 20, 2020

Economic and Social Costs of "Reopening"​ America

Asking "mainstream" economists about reopening the economy in the face of the current crisis is unlikely to generate useful advice. These are the same people who missed the 2008 financial crisis (page 6, top) and were unable to predict the election of Donald Trump in 2016.

An independent view on the economic impacts of the Coronavirus, informed by relevant insight from American history – in this case, Black Wall Street/Tulsa, Oklahoma, may better explain the exact nature of the problem the country now faces.

The Greenwood District in Tulsa, Oklahoma was one of the most prominent concentrations of African-American businesses in the United States. It was razed to the ground in the Tulsa race massacre of 1921, in which white residents massacred as many as 300 black residents, injuring hundreds more. Our analysis starts by comparing the economic devastation wrought by this incident to that of the coronavirus, since, like the virus, business properties were rendered uninhabitable. In addition, broad swaths of the population were instantaneously unemployed. Wealth, for both Blacks and whites, was destroyed on a massive scale, .

Our analysis shows social costs from the virus total $30 trillion. The economic costs are $15 trillion. (Note: these are NOT the actual impact numbers from our analysis. They are correct ordinally, however. For more, email us at and see

The bottom line: economic impacts pale in the face of human pain and suffering. This mandates a focus on the human, not the economic.

The rush to open the economy reveals the greed and inability to operate in the public interest that is the cause of the unethical financial institution behavior observed in recent decades. Mainstream economists missed this. This exposes larger issues about the true nature of the economy and western economists. The celebrity veneration, money worship and focus on shareholder wealth maximization that dominate business strategy dictates the economy be reopened as soon as possible.

In the push for short-term profits to meet the demands of investors - a small, nonminority, nonrepresentative group - human considerations are subordinate. (A Former Wells Fargo CEO wants people to go back to work and 'see what happens.' He said 'Some may even die, I don't know.' The ex-CEO of Goldman Sachs wants “those with a lower risk to the disease return to work,” in a few weeks. These are simply greedy, unpatriotic institutions and individuals whose lack of empathy, in the midst of this crisis, is the textbook definition of a psychopath.) Regulators and policymakers have been excessively deferential to this group of investors, to the exclusion of human needs.

Cost reductions, the main tactic used to maximize shareholder wealth, eliminated excess financial capacity across the economy. This is what various fiscal and monetary programs have attempted to replicate. They have failed so far.

This is key. The interruption in revenue that is the main result of the shutdown has driven many firms out of business, but, in the face of a highly contagious virus, reopening the economy now makes little sense. In addition to the human suffering this will cause, it will eventually lead to a second or third shutdown. Thus, a focus on the economic is not only inhumane but inefficient.

In order to address the current crisis, efficient monetary and fiscal demand side stimulus is required. Monetary policy operates through banks, a small set of privately owned, profit maximizing institutions. These lower both social and financial return. Fiscal policy is suspect as well, as proven by the failures of the Paycheck Protection Business Loan (PPP) program. As we indicated, and as the head of the Atlanta Federal Reserve Bank confirmed, U.S. small businesses alone may need $6 trillion on an annual basis to ensure their survival through the coronavirus crisis.

As with much of the current situation, rational planning focused on human needs is absent. Such a plan would involve global coordination, with global virus testing and synchronized global fiscal and monetary stimulus. Current political, cultural and economic practices are completely unsuited for this level of cooperation. (We note that this stimulus could be generated efficiently, at a very disaggregated level through a widely held cryptocurrency.)

Until we have a rational plan, any attempt to reopen the economy will, in the long run, generate massive social and financial costs.

It will, in other words, fail.

Friday, April 10, 2020

Open letter to the Congressional Black Caucus (with apologies to Mr. Lincoln.)

Four months ago, our nation was made host to a virulent, deadly visitor, brought to this continent surreptitiously. A new virus, uncovered in China, unsparing in occurrence.

Now we are engaged in a great experiment, testing whether any nation with significant divisions based on politics, race and wealth, can survive in the face of such a disease. We have come to give our testimony while we still can, to help insure the survival of all who participate in this society. We are writing not as millionaires but as common people, like the medical and public safety workers who gave their lives that this nation might live. As citizens of the world, we have an obligation to speak out. As citizens of the US, we have the right to do so.

We offer an independent view on the economic impacts, having gained relevant insight from American history – in this case, from Black Wall Street/Tulsa, Oklahoma, to better understand the exact nature of the economic problem the country now faces. Of course, in a larger sense, we know that economic impacts pale in the face of human pain and suffering. This mandates a focus on the human, not the economic.

The world will not notice, or remember, what is said by imperfect people with imperfect means to correct the current condition. Our goal is to make sure that this situation is not used to argue for the inherent inferiority of those most impacted by this virus. We are dying at elevated rates not due to some ingrained defect. Rather, the defect resides in a racist, bigoted and biased system for the allocation of resources, including health care resources. This crisis offers an opportunity to correct this misallocation.

As an organization, we have long been dedicated to this unfinished work. We call upon you, as members of the Congressional Black Caucus to insure that all deaths from this virus will ultimately have meaning —and that democratic government, tasked with providing relief from an affliction that knows no race, status or geography, necessitating fairness and equity, will not cease to exist.