PPP, Robbery In Plain Sight: One Investor's [Very] Personal Take

The nightmare that unfolded over the last month has already taken a toll on millions, and tomorrow looks like it will deliver the next devastating blow. And no, I don’t just mean COVID-19, and the 55 thousand souls, mostly people of color, who have perished from it in the US. I mean the thing that will all but guarantee countless more deaths to come. I’m referring to what, before the week is up, will end up totaling $559 billion dollars in federal stimulus, called the Payroll Protection Program (PPP), designed (in theory) to help small businesses survive. Tomorrow it will effectively steal billions more from the mouths of those who need it most, all but reversing generations of progress. Progress that has been painfully earned by the same group of people most likely to have lost loved ones to the Coronavirus. The group most likely to be among the dead in cities across the country where they represent the majority of fatalities but not the majority of residents. And within this same group are the entrepreneurs starting businesses at faster rates than anyone else in the country, our economic engine. I am of course, referring to business owners of color. 

Ashley Harrington, the director of federal advocacy and senior council for the Center for Responsible Lending, says they estimate that “upwards of 90% of businesses owned by people of color have been, or will likely be, shut out of the Paycheck Protection Program.”

With only $30 billion dollars earmarked for small banks and CDFIs who serve underrepresented groups, I think the picture is actually more grim. I’m afraid we’ll be lucky to see 4% of the total PPP funding go to communities of color. What’s worse? My sources tell me that while small business owners were told that their applications were paused because PPP funds ran out (true, and most of it went to large corporations, thanks to carefully designed loopholes), larger companies got calls from their personal bankers telling them to push through and get ready for the second tranche. All last week and into this weekend, those businesses and their bankers, worked days and nights getting applications pushed through underwriting and approvals, to stockpile them for 10:30am ET on Monday morning, when the SBA said they would begin processing. Though as I type this, I’ve received reports that at midnight, Eastern time, the SBA system had already started confirming receipt of some early bank entries. The first $249 billion went in less than two weeks because no one was ready. I suspect the majority of the next $310 billion will be gone in hours, not days.

Practically, what this means is that millions of small businesses owners all over the country, seeing the news that the next round of PPP becomes available Monday morning, plan to call their banks as soon as office hours begin. To their horror, I fear most will be getting a rude awakening when they discover that they’re last in line if not entirely locked out, through no fault of their own except for not having an inside track and the amount of capital to be noticed or prioritized by their bank.

I’ve already appeared in the media, co-authored a Newsweek Op Ed and multiple private memos to legislators outlining what this means for communities of color and how directly it is connected to short and long term health outcomes, so I wont reiterate that here. What I wanted to put down on the page tonight is more of a personal marking of this moment. If nothing else, I’d like to capture what we knew, before the full scope of this tragedy unfolds, in order to remind future us how deeply we understood, and how little room there will ever be, for excuses and leaders who will someday deny knowing what was about to happen.

By one financial analyst’s calculations shared with me this week, we can expect to see a full 50 percent of all Latinx businesses go under and not come back. Fifty percent of 4.8 million small businesses is hard to wrap my mind around. How does my community, or for that matter how does this country that we power, “rebuild” after that? I don’t think we do. I think what we’re facing is nothing like the return from any recession we have seen or studied. What comes next will have more in common with nation building than with disaster recovery.

In the coming days and weeks, many of us business leaders will outline plans and roadmaps to build a path forward. But right now, in the calm before tomorrow’s storm, I want to take a moment to acknowledge that we knew, that we warned, and that this preventable tragedy for communities of color that so many of us saw coming, is about to give us a federally funded, bipartisan approved, fatal blow.

The rage is almost too much to handle. 

This week I’ve attempted to help save an organic chocolate manufacturer who employs women smallholder farmers, an ethical emergency loan maker that obviates the need for predatory lenders like Payday Loans, and a beloved organization that has, for years, hosted cultural exchanges with some of the most talented international professionals from countries that the current occupant of the White House wouldn’t likely know how to pronounce. And through it all I have kept the steely composure of a surgeon, channeling my rage into productive action and a daily newsletter, intended to provide much needed resources to business owners in crisis. I’ve declined thank you gifts (yes, even the chocolates) and kept calls to a minimum, doing my best to stay focused, objective and unemotional. Until this afternoon, that is, when I got a call from a friend, who like me, is the beneficiary of immigrant parents who risked everything to come to this country. After hearing his now all too familiar story of failed attempts with his bank, I realized that what his Korean American family had worked so hard to build was now at risk. And as if insult was missing from injury, he told me stories of being spat on, robbed and harassed, while doing his job as a pharmacist during a pandemic in one of the hardest hit areas in the country. Think about that: an owner-operated pharmacy serving on the front lines of a community that cannot survive without them, is at risk of not getting access to critical federal stimulus because the banks our government haphazardly tasked with serving small businesses simply can’t be bothered.

"Devastating" doesn't begin to capture it. I know what it’s like to watch my immigrant parents build and sacrifice, little by little. I also know what it’s like to see loved ones go without, just so I could be lifted up. And like my friend, I know what the weight feels like, when the outcome of their life’s work is left on me to carry and keep alive. The heaviness is both an honor and a burden. 

Tonight I’ll lose sleep worrying about that family-owned pharmacy, and the millions of businesses just like it. And tomorrow, while one of the greatest robberies of our time happens in plain sight, my team and I will do our best to hack the broken system we’ve been handed, and secure relief for as many as we can. No matter the outcome, I will never understand how we as a nation allowed bigotry and corruption to put so much at risk. But what I do know is that I plan on living the rest of my life ensuring that what we build next turns out far less hostile to communities of color, and a lot more like a bigot’s worst nightmare. Because like Arundhati Roy, I believe “another world is not only possible, she is on her way. On a quiet day, I can hear her breathing.”