Beyond the Rhetoric 497: What Happened to Black Business Loans?
Jo-Carolyn Goode | 11/30/2015, 1:27 p.m.
During the 2000 Presidential Election, President George W. Bush made a written pledge to the National Black Chamber of Commerce® (NBCC). He claimed that he would focus on the doors leading to increased capital access for minority businesses. To our astonishment, he delivered on that pledge while Candidate Al Gore refused to make such a pledge. Thus, begun eight years of positive growth in Small Business Administration (SBA) lending.
The above activity soon began to disappear for two reasons: The effects of the subprime mortgage crisis and the lethargic activity coming out of the Obama SBA. President Obama figured the quick fix would be more and more regulation. In 2010, he signed the Dodd – Frank Amendment which poured “mountains” of paperwork and rules for our banking institutions. The push back was major banks began refusing to underwrite small loans, inclusive of the guaranteed SBA loans. When President Bush stepped down the SBA was doing over 8% in loans to Black businesses. Today, under the Obama apathy and immense regulations, the SBA is doing less than 1.8% in lending to Black businesses.
It got worse than this, the SBA began attacking the NBCC for letting out the news of the downward trend. They even claimed that I had no access to the percentages of loans because no one tracks them. To my surprise, George Curry, who was editor of the National Newspaper Publishing Association took their “bait” and began believing them over the NBCC. Finally, after a white investigative reporter from the Wall Street Journal confirmed my allegations, George came around.
According to the Valley Economic Development Center, “SBA loans to African-Americans declined 47 percent between 2009 and 2013, even as overall SBA loan volume rose roughly 25 percent during the same period.” Doesn’t this paint the picture?
The subprime mortgage crisis devastated the net worth of Black families. That net worth was based on equity in our homes. The homes have disappeared in many of our communities and with it went the equity which made new entrepreneurs bankable. The biggest players in the mortgage business were Fannie Mae and Freddie Mac. These two Government Sponsored Enterprises are now “owned” by the Obama Administration as he virtually “seized” them as they approach bankruptcy. Will they bounce back? That is doubtful as right now the Obama Administration is trying to liquidate the two firms. We are fighting against this effort.
The above should be a hot topic during the presidential debates but so far there has been no traction. We are going to bang the “drums” much harder for it to become a major political issue. Despite the lack of financial activity, African - American firms offer a direct path to job opportunities. Our restaurants, service providers, IT shops, construction companies, etc. are the key to our growth and financial gain. The lifeblood for these companies is upstart capital and that necessity is fading under the current Administration and it is paramount that the next Administration will address it with a vengeance.