Claudia Garza and her husband Rick own Bright and Early Productions, a photography and videography company targeting the real estate industry. In an effort to keep employees safe from COVID-19 they’re currently only photographing unoccupied homes. They’ve lost business as a result and had to reduce their employees’ hours.
When they found out that $349 million was set aside for the first Paycheck Protection Program, they wanted to apply through the bank where they have their business and personal accounts, Wells Fargo. But they couldn’t.
Claudia Garza described first having trouble with getting someone on the phone, and then when she did, they worked with her at a slow pace.
“It feels like I'm a small fish... maybe they have people who have larger accounts or maybe contacts within the bank. They got the help a lot faster than I did. I don't have contacts at Wells Fargo,” she said.
Ultimately she chose to move her application to the Lift Fund, a community development financial institution.
President Donald Trump signed the most recent small business relief package into law Friday. Many small businesses are waiting on the Paycheck Protection Program to reopen with its $310 billion for businesses, and many that are waiting are, like Garza’s, Latino-owned.
“The data shows that Latinos and Latinas have not received their fair share of the program, the protection money, the PPP,” said Ramiro Cavazos, CEO of the U.S. Hispanic Chamber of Commerce.
About 70% of the Latino-owned businesses that completed their application have not received any funding, according to early data from a questionnaire filled out by about 800 businesses conducted by the League of United Latin American Citizens (LULAC) and the U.S. Hispanic Chamber of Commerce. Many have not received any word on where they are in the process.
“50% of Latino businesses will be out of business before we see any direct impact by the federal government,” said Sindy Benevides, CEO of LULAC citing a Brookings study.
Banks are failing Latino business owners in administering federal relief, and time is running out, she said.
Their data showed the nation’s largest lenders offered few and at times no loans to Latino business owners.
Wells Fargo — one of the biggest lenders in the nation and one of the banks Latino business owners applied to the most — funded zero PPP applications from latino business owners surveyed.
JPMorgan Chase and Bank of America accepted only 12% of about 80 Latino applicants.
These data points are currently small, but Juan Proano — whose company Latino Strategies has been breaking down the survey results — said they are seeing the same things over and over again as the numbers grow.
“Our goal was to get a large enough statistical number to talk about,” he said.
Only the banks and the Small Business Administration have this data. LULAC and the Hispanic chamber want demographic data to be released.
“This is not new. This pandemic and how banks treat minorities is not new,” said Janie Gonzalez CEO of Webhead Technology, a San Antonio-based internet technology company. “If anything, I’ve seen it amplified.”
Gonzales said accessing credit was incredibly hard when she got started and the interest rates were in excess of 28%. And she was grateful for that. She wasn’t surprised by the data about big banks. She expected it. That was why when she applied for the PPP she went with Broadway Bank, a regional bank instead of Bank of America where she also has a business account. She was approved but hasn’t seen the funding yet.
“BOA has all the bells and whistles technologically, but (at Broadway) I pick up the phone and someone talks to you,” said Gonzales.
Bloomberg reported similar successes of regional banks compared to large national banks in processing PPP loans. One lender that Latino businesses saw success with was San Antonio-based Frost Bank, which according to the LULAC data funded 60% of the Latino-owned businesses that applied.
LULAC and the Hispanic Chamber are now asking for $50 billion to be set aside for Hispanic or Latino businesses.
They often are smaller, have a less established relationship with a bank, and the data shows their needs were not met by the first funding round.
“One out of every two of our businesses are micro businesses (with fewer than 10 employees),” Cavazos said, “and we don't need to lose those businesses because if we do, we'll lose them permanently.”
Cavazos said the powers that be were beginning to listen, and that much of the problems with the programs stem from “building the plane while they are flying it.”
Banks distributed the first $349 billion in 13 days. The next round of funding could go even quicker given more than a million applicants are still in the queue from the last round.
In a statement Wells Fargo said it was pleased the government had approved more funding for the PPP, and has mobilized many more employees to assist.
“Wells Fargo is working as quickly as possible in compliance with the regulations and guidance provided by the U.S. Treasury and Small Business Administration to prepare applications from small business customers..."
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