Now Reading
Minority Report: Did the Federal CARE Act Help South Asian American Businesses?

Minority Report: Did the Federal CARE Act Help South Asian American Businesses?

Shriya Brahme
  • While the PPP has helped some businesses to maintain payroll for the time being, it was neither easy to obtain, nor will it be sufficient in the long run.

It is no surprise that the COVID-19 pandemic has hit small businesses particularly hard. While small businesses have suffered tremendously, minority owned small businesses have been impacted disproportionately. The federal government’s attempt to address the economic impact of COVID-19 on small businesses, through passage of the Coronavirus Aid, Relief, and Economic Security Act (CARE) Act, has been woefully inadequate due to structural flaws and implementation. 

According to research conducted by McKinsey and Company on “COVID-19’s effect on minority owned small businesses in the United States,” there are two major reasons why minority owned businesses will continue to struggle more during this pandemic: (1) they usually face greater challenges when scaling their businesses; and (2) they typically tend to be congregated in industries that have been heavily affected by the pandemic. The largest share of minority owned small businesses fall under the category of service, including food services, accommodations, and personal care services. 

To give a brief overview, the CARE Act details three major initiatives: the Paycheck Protection Program (PPP), the Economic Injury Grant, and the Small Business Debt Relief Program. Along with these initiatives, it also provides access to resources to assist with counseling, contracting, and small business tax provisions. The question remains, whether these will be enough to address the specific challenges facing South Asian and minority owned businesses. 

The PPP focuses on assisting employers to continue their payroll, while the main directive of the Emergency Economic Injury Grant is to provide low interest loans that can be used for a variety of operations that the business needs assistance covering. The Small Business Debt Relief Program aims to provide assistance to small businesses that have secured certain Small Business Association (“SBA”) loans (7a, 504, and microloans). Under this program, SBA will cover all loan payments, interest, and fees for six months. The benefits of this program will also apply to all borrowers who will be granted loans. 

To further understand the depth of this issue, it is important to note that minority owned businesses typically tend to earn less to begin with, and they also have smaller amounts of resources. According to the Brookings Institute, minority and women owned business enterprises (“MWBE”) have approximately 30% less employees compared to White or male owned enterprises, and average sales are typically 50% to 90% of the White or male counterparts. 

It is important to note that minority owned businesses typically tend to earn less to begin with, and they also have smaller amounts of resources.

In a recent interview, Sohail Ishaq, a South Asian business owner, explained the overarching effect of COVID-19 on his business. Ishaq owns an Indian-Pakistani restaurant in Tennessee and his business had drastically decreased. While the PPP has helped him maintain payroll for the time being, it was not easy to obtain, nor will it be sufficient in the long run. Accordingly, with creating a better sustainable loan program for small businesses, the government should ideally develop a program that is easy to understand and makes the application process less cumbersome.

Furthermore, the program should be friendly toward immigrant owned businesses. He also explained that margins of profit have greatly decreased, while price gouging has made it more expensive to purchase the regular stock of goods necessary to run his restaurant. Special items that he purchases from overseas to prepare his dishes have also become more difficult to obtain. 

My conversation with Ishaq provided insight into the challenges many minority business owners are facing. Scarcity of certain goods has led to price gouging for certain exported items that many South Asian businesses rely on. Several global supply chains have been disrupted due to COVID-19 and manufacturers are not easily able to export goods that are essential to minority business. Importing spices and ethnic ingredients required for many South Asian restaurants and grocery stores is likely to be slower and more expensive. 

See Also

As quarantine continues in many parts of the world, labor management and production will have to be restructured in order to maintain social distancing guidelines. For underlying problems such as these, it is necessary that the government provide adequate assistance to minority owned small businesses. However, in reality, the CARE Act has proved to be a loosely regulated and an insufficient source of assistance to thousands of business owners. 

While the aim of the PPP and CARE Act was to help small business owners, millions of dollars were given to large publicly traded corporations, depleting funds reserved for small businesses in just a matter of weeks. Some large corporations such as Shake Shack and the Los Angeles Lakers returned their PPP loans, though only after public criticism. Several large companies were able to obtain a loan on the notion that the pandemic created uncertainty into their future outlook. 

The bottom line is clear: the loan acquiring process should require stricter regulation, which is currently not happening. Small business owners, particularly those which are minority owned, should have money specifically allocated for them within the program. South Asian minority owned businesses help promote diversity and inclusion within our communities. They create a pathway for understanding and acceptance from people of one culture to another, and it is critical they are given the resources they need to in order to continue to create a more accepting and diverse United States of America. 


Shriya Brahme is a recent graduate of Rutgers University — New Brunswick, where she majored in Economics and Public Health, and is an aspiring economist. She is on the advocacy and lobbying committees for ​South Asians for America (SAFA), which is a voluntary organization committed to advancing the interests of the South Asian community. SAFA provides grassroots support and mobilization to elect South Asian candidates and works to address current issues and vocalize community support to further causes impacting the community. 

What's Your Reaction?
Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0
View Comments (0)

Leave a Reply

Your email address will not be published.

© 2020 American Kahani LLC. All rights reserved.

Scroll To Top