Two Charleston area nonprofits have teamed up to offer economic support to minority-owned businesses amid the coronavirus pandemic.
North Charleston's Lowcountry Alliance for Model Communities is providing the downtown Charleston-based Local Development Corp. $300,000 to administer a Back to Work Loan Fund that will provide startup and existing businesses with loans ranging from $2,500 to $25,000. Businesses must be owned by people of color in one of the following neighborhoods: Acabee, Chicora-Cherokee, Union Heights, Howard Heights, Windsor Place, Five Mile and Liberty Hill.
LAMC, which already has a microloans program, pivoted the initiative to target minority-owned businesses amid a crisis where African Americans are disproportionately affected by the coronavirus. The disease is also likely to have a greater economic impact on minority and low-income communities, said LAMC President Omar Muhammad.
"The worst thing that can happen is those communities backtrack," Muhammad said.
Loans will be assessed at an interest rate no more than 4 percent. Twenty-five percent of the principle will be forgiven if the applicant hires and retains at least one employee from the seven neighborhoods over the term of the loan.
LAMC will conduct the initial screening while the Local Development Corp.'s credit committee, which will have one LAMC member, will make the approvals and shoot for a rapid turnaround, said LDC CEO Steve Saltzman.
Saltzman said the endeavor aligns with LDC's goal of giving capital to those who've been historically disenfranchised from the banking system. Additionally, minorities are more vulnerable to payday lenders, and the LDC does not want to see them fall prey to those who may take advantage of businesses falling on hard times.
“We fear if they go to a payday lender, they may engage in a financial situation in which they may never recover," Saltzman said.
The economic impacts of the virus have been far-ranging for businesses that have either been closed or limited to take-out and delivery services. Based on multiple surveys done by LDC, half of small businesses in Charleston are operating at 30 percent or less of their typical revenues.
Some won't survive the crisis, like Nana's Seafood & Soul downtown Charleston spot that won't be reopening after restrictions on dine-in service are lifted. The business' North Charleston location will, however, continue to operate.
Melvina Ravenel, who owns Da Gym dance studio on Rivers Avenue, said the minority-targeted funds could be life-altering. Her business is one of many in the state deemed non-essential and forced to shutter doors.
Funding would enable her business to continue offering space for black dance instructors to share their craft.
“That would be an absolute blessing," Ravenel said of a potential business loan.
Despite the challenges, minority businesses have been the most resilient, Saltzman said. He noted several Charleston area chefs who have never operated delivery services taking foods to doorsteps and establishing "virtual restaurants."
"The folks being most resilient are those getting least amount of aid," Saltzman said.
Saltzman is one of several who've said federal money for small businesses hasn't trickled down to the minority communities.
The $2.2 trillion CARES Act, which includes the Small Business Administration's Paycheck Protection Program, won't help many in African American and Hispanic communities, which historically have large numbers of people lacking banking relationships, he said.
Additionally, stories about wealthy organizations, such as the Los Angeles Lakers and the Kiawah Island Community Association, obtaining small business loans indicates that persons at the bottom of totem pole are being excluded, said LAMC executive board member and state representative Marvin Pendarvis, D-North Charleston.
“Black businesses are being hurt," he said, and "they are not being talked about on the federal and state level. Their challenges are unique and different.”
Pendarvis anticipates the state's Legislative Black Caucus will offer specific proposals in the coming weeks about how federal money can be used in South Carolina to specifically target black and minority-owned companies.