Showing posts with label Black business. Show all posts
Showing posts with label Black business. Show all posts

Thursday, February 25, 2021

Banks Redouble Efforts to Aid Black-owned Businesses. By John Reosti, The American Banker Newspaper. February 24, 2021.

Banks of all sizes are continuing to direct funds to minority-owned businesses months after the social unrest that followed last year’s death of George Floyd.

JPMorgan Chase just announced plans to invest $40 million in four Black-run banks. Ally Financial, Banner, Citigroup, Texas Capital Bancshares and First Republic Bank joined JPMorgan in providing capital to help fund Broadway Financial’s pending acquisition of the $435.4 million-asset CFBanc in Washington.

Four community banks — First National in Strasburg, Va.; Fauquier Bancorp in Warrenton, Va.; Eagle Financial Services in Berryville, Va.; and Potomac Bancshares in Charles Town, W.Va. — recently created a $1 million fund to provide loans to Black-owned businesses and farms in their markets.

The latest efforts show that the banking industry is still evaluating ways to help underserved markets.

“There’s no doubt we needed to do an assessment on what more we could do as a firm,” said Brian Lamb, global head of diversity and inclusion at the $3.4 trillion-asset JPMorgan. “I think we took the opportunity in the summer of 2020 to really do that assessment internally.”

Though JPMorgan declined to disclose how much it invested in the Black-run banks, the $686 million-asset Carver Bancorp in New York said it received $6 million and the $765 million-asset Liberty Financial in New Orleans brough in $10 million.

The $481.6 million-asset Broadway in Los Angeles disclosed that it will receive $20.2 million from a group of investors that includes six banks after completing its purchase of CFBanc in Washington. The Los Angeles company raised $12.7 million in November after Bank of America, Wells Fargo and Cedars-Sinai Medical Center made an investment.

The $309 million-asset M&F Bancorp in Durham, N.C., did not disclose the size of the investment made by JPMorgan Chase.

Bank of America invested $950,000 in Carver in October.

The equity injections may signal an “inflection point” for underserved markets, Carver CEO Michael Pugh said in a Tuesday press release. “Public and private firms are recognizing the importance of investing in communities of color and institutions that support economic empowerment.”

Smaller banks are finding their own ways to support minority communities.

Discussions among the Virginia and West Virginia banks that led to the creation of the Banking on Diversity Minority Business Fund began about two years ago, spurred by a task force the Virginia Bankers Association created to focus on financial inclusion and diversity, said Scott Harvard, CEO of the $951 million-asset First National.

“We were missing out on a really broad, diverse population, so we started talking about what we could do to bridge that gap,” Harvard said. “The events this summer clearly put a spotlight on things. It got everyone’s attention.”

First National, the $867 million-asset Fauquier, the $1.1 billion-asset Eagle and the $621 million-asset Potomac will use the fund to make interest-free loans to minority-owned enterprises.

“Initially, we talked about a grant program, but we figured we could leverage more money with a loan fund,” Harvard said. Loans also provide a surer foundation for building long-term relationship with minority businesses, he added.

The fund “stands out,” said William Michael Cunningham, the CEO of Creative Investment Research in Washington and an economist who has studied Black-owned banks for three decades. “I think it’s exactly the type of thing we need to see.”

The big banks that have invested in the Black banking sector might have produced more far-reaching results if they had acted in concert, though "it’s hard to question their intentions,” Cunningham said.

JPMorgan, for its part, plans to be a passive investor in the Black-run banks whose shares it has purchased.

“In terms of governance, our intent is much more about capacity building and end-to-end solutions for minority depository institutions,” Lamb said. “It’s a lot less focused on governance.”

The goal ultimately is to give Black-run banks enough tools to serve as long-term, durable financial partners in minority neighborhoods.

“We know there’s been a contraction in this space for the past two decades,” Lamb said. “When these institutions are active in their local communities, those communities have a better chance of growing and thriving.”

Thursday, May 14, 2020

Black People and COVID-19: Key Impacts.

Black People and COVID-19 | Key Impacts

A new national survey of African American small businesses was conducted by Washington, D.C.-based Creative Investment Research. The survey asked questions about the Paycheck Protection Program and the Economic Injury Disaster Loan Emergency Advance (EIDL) Programs. The survey was intended to get a true pulse of how effective the lending programs have been. Sixty four percent (64%) of survey participants that said they applied for the Paycheck Protection Program (PPP), only 19% got funding. Even those receiving funding, however, got far less than what they asked for or expected. As survey respondents were predominantly Black businesses, this gives us some insight as to why unemployment is high and growing among Black Americans.

What can Black people do immediately?
  • Apply for the stimulus check of $1,200 - 100% probability rate of receiving;
  • Apply for Paycheck Protection Program (PPP) - much lower probability rate of receiving PPP, only about 19% received funding per survey results. Services to help you apply:
    1. Lendio - committed to trying to get capital to black, women and minority companies
    2. Paypal
  • Apply for the Economic Injury Disaster Loan (EIDL)
  • Identify internal resources. Caucusing with your network to ask for money (loan pool). Look to your family for financial support and guidance.
Expected Impacts of COVID-19, ranked from most to least significant:
  • Health (95%). This is because: lack of top-level hospitals in communities of color, gentrification;
  • Employment (85%) - We estimate Black unemployment will hit 50% at peak. This is because Black people are the last hired, first fired. A lot of black Americans work in the service industry, which has been one of the hardest hit by the pandemic;
  • Education (70%) - The best opportunity to fix this issue is through more equitable and creative educational opportunities;
  • Homeownership (50%) - We suggest that the Fed engage with Fannie Mae and Freddie Mac to create mortgage-backed securities (MBS) to help Black homebuyers;
  • Small Businesses (40%) - Lower than expected impact since Black business owners are equipped with better survival skills.

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.

See: https://www.blackenterprise.com/black-american-business-owners-sound-off-in-new-survey-of-ppp-programs/#.XqNSTo3VO9d.twitter

Friday, February 22, 2019

Bill to Support Black and Community Banks

New federal banking legislation,"H.R.41 - RESCUE Act for Black and Community Banks" was introduced by Congressman Bobby Rush (D-Il) on January 3, 2019.

We worked, along with the Financial Services Innovation Coalition (FSIC), to draft this new legislation, which contains many of the ideas we have been working on for some time. Recently, FSIC sponsored a letter of support. To add your name, please see: https://lnkd.in/ejv9Ef6
  hashtag The bill is designed to take a focused approach to saving and expanding the number of Black-owned banks operating in the US. This legislation is designed to meet the needs of the Black community, not just serve bankers. Our contributions were part of a collaborative effort in the overall national interest.

The bill, which has just started the legislative approval process, contains the following provisions:

1. Establishes in the Office of the Comptroller of the Currency the "Office of Black and Community Banks".

2. Seeks to partially or completely exempt Black banks and community banks from Federal banking statutes and regulations, to the extent the Comptroller determines it appropriate without endangering the safety and soundness of such banks.

3. Seeks to have the Securities and Exchange Commission issue regulations to reduce the regulatory burden applicable to Black banks and community banks—
(i) under the amendments made by the Jumpstart Our Business Startups Act;
(ii) issuing mortgage-backed securities; and
(iii) issuing securities backed by loans guaranteed by the Small Business Act.

4. Provides a crowdfunding exemption for Black and Community Banks under the JOBS Act.

5. Reestablishes the federal Minority Bank Deposit Program.

6. Expands federal agency use of Black and community banks.

7. Gives specific consideration under the Community Reinvestment Act (CRA) for majority institutions that partner with Black and community banks.

8. Calls for a study on the use of New Markets Tax Credits by Black an community banks.

Community banks in general and black banks in particular, have suffered in the decade since the great recession. Black banks have almost become extinct with barely 20 banks left. These declines have had especially devastating effects on black communities. Black home-ownership is less now than it was in 1968, and black wealth is unchanged over that same period of time, with some predicting black wealth will be zero by 2053.

African Americans are excluded, with the exception of token representation, from owning regulated institutions in the financial services industry, without access to the prosperous and dynamic activities of banking, venture capital and investing. The combined assets of all black banks were less than $6 billion as of 10/31/18 according to the Federal Reserve Board. It is well known that less than 1% of VC money finds its way to minorities and women. This is evident by the small size of black banks as compared to their non-minority counterparts. Wells Fargo has $11 trillion in assets. In fact, the 600th richest person in the world is worth over $5 billion and the 10th richest venture capital (VC) firm is worth roughly $5 trillion.

Remedial action is clearly a necessity and we are glad someone with Congressman Bobby Rush's stature and history is leading this fight. Contact us for more information. To see the full text of the bill, visit: https://www.congress.gov/bill/116th-congress/house-bill/41

Friday, July 14, 2017

Black Business Index & Survey

We are conducting a survey of Black Business Conditions as we prepare for our Texas Talks (see above). Note that you do not have to be either in Texas or a Black-owned Business to fill out this survey. In fact, we prefer to have a range of business owners respond. We are, however, specifically focused on the Black business sector in Texas.

To view and complete the survey, please go to: https://www.surveymonkey.com/r/NCVQLLL

Thank you!

Friday, June 30, 2017

State of Black Business Report - Dallas 8/22


The State of Black Business will inform members and community leaders on the climate, condition, and trends of African American business.  The Keynote Speaker, Economist William Michael Cunningham, is the founder of Creative Investment Research and serves as Managing Partner for National Crowdfunding Services. The Forum is a critically important forum to discuss and design a plan for greater economic impact within our communities. You will want to join this discussion with black business leaders from around the city!

Invitees to this event will include elected officials, corporate sponsors, community leaders, DBCC Board of directors and select Chamber members.

August 22, 2017

Cityplace
2711 N. Haskell
Dallas, Texas 75204
8:30 a.m. – 6:00 p.m.

State of Black Business Registration:  (Early Bird Special) $75 Member/$100 Non-Member

Friday, May 10, 2013

On Black Banks

I saw an article recently on Black banks in the US that was filled with inaccuracies. It was a public relations piece for the banking industry, so I thought I would post something based on my 20 years of research experience in the sector.

1. What is the historical significance of Black banks?

They were created at a time when discrimination against Black people was legal in the US. They served as the only financial service providers to the community.

2. Do Black banks have the same level of significance to the Black community today? Why or why not?

No. They are too small to serve the community in any meaningful way. For example, they cannot serve as a line of defense against predatory lending. The result: banks like Wells Fargo are free to target black communities for shoddy loanshttp://www.washingtonpost.com/business/economy/former-wells-fargo-loan-officer-testifies-in-baltimore-mortgage-lawsuit/2012/06/12/gJQA6EGtXV_story.html

Some Black banks were trying to help: See:
http://twisri.blogspot.com/2008/03/racial-divide-in-mortgage-mess-carver.html

But most were not. See:
http://twisri.blogspot.com/2009/04/black-owned-bank-has-few-urban-loans.html

This is contrary to their original mission. See:
http://www.creativeinvest.com/research/mlkoninvesting.html

3. What factors contributed to the dwindling in the number of Black-owned banks?

Several factors, but the main one is a lack of vision. Let's face it, though. Greed is a factor, too: "Regulators in October (2008) concluded in a cease-and-desist order that one Black bank had poor standards for qualifying and documenting loans, and gave top executives excessive pay and perks. Two of the perks regulators targeted were a $6.4 million beachfront Santa Monica mansion Cohee used while in California and a Porsche SUV..." 

Really?

4. How would you characterize the experience of Black banks in America throughout their history?

They once served a critical role in Black economic development, but they were sidetracked by the factors listed above. 

5. How did the recent Great Recession impact Black banks?

Decimated most of them.

6. Do you believe Black banking institutions were given a fair shake with regards to the TARP program?

Perhaps, but one Black bank got the most: http://www.washingtonpost.com/wp-dyn/content/article/2010/08/11/AR2010081105561.html

7. What is the forecast for Black banks moving forward?

We will see the number fall to low single digits within 10 years.
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