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SPECIAL REPORT: Black-Owned Businesses Struggle to Stay Afloat During Pandemic

SPECIAL REPORT: Black-Owned Businesses Struggle to Stay Afloat During Pandemic.
SPECIAL REPORT: Black-Owned Businesses Struggle to Stay Afloat During Pandemic.
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Briana Smallwood worried she’d never again hear the sounds of customers placing their orders.

Smallwood co-owns Vivian’s Soul Food restaurant in southwest Cedar Rapids.

“We eat, sleep and live it, literally,” Smallwood said.

She and her husband had just moved to their new location last February. Business was brisk. “About 800 to 1,000 guests” per night, Smallwood said.

Then, the pandemic hit. “We weren’t really sure how it was going to impact Iowa.”

Smallwood feared the worst. “We had a lot of sleepless nights. We were completely scared and we thought it was a death sentence for the business.”

Governor Reynolds ordered a shutdown to slow the spread of the coronavirus. “We really thought that it was going to be the end.”

The closures forced restaurants like Vivian’s to do take-out and delivery only. “The first two weeks it was awful. We took about a 60-percent decrease those first two weeks. We got little to no business,” Smallwood said.

Congress passed the Paycheck Protection Program, the largest federal small-business rescue program in U.D. history, to help small businesses pay their workers and stay afloat.

“Initially, we didn’t get approved for that,” Smallwood said.

The pandemic is hitting small-businesses hard. Many business owners of color are struggling to stay afloat. A recent survey of 500 black-owned businesses found that as of last month only 12-percent got the loan amount they requested.

Fred Cortland and his wife own Unique Beauty Supply in southeast Cedar Rapids. They said they never got their federal loan. “We applied for it. But we never got a response,” Cortland said. “We just waited and waited.”

Forty-one percent of Black-owned businesses closed at least temporarily from February to April. The number of Latino-owned businesses dropped 32-percent. White business owners decreased 17-percent. “For all of them that have been impacted and had a drop in sales, had to close their doors, whatever that’s their blood, sweat and tears that is gone now,” Smallwood said.

PPP was intended to pump hundreds of billions of dollars into small businesses. But many black-business owners face a number of disadvantages like a lack relationship with a bank; disincentives for banks to prioritize smaller loans; more than 95-percent of black small businesses are sole proprietorships. That limits the funds they can access.

“If you don’t have high numbers and just good standing with a particular bank and you’re trying to go to any bank then of course they’re going to approve their members over you,” Smallwood said.

Smallwood believes black small business owners need to build stronger networks. “We don’t network enough within the black-business community. We don’t have enough shared resources within our community to really teach and guide each other through these processes.”

Smallwood was persistent. She eventually got her federal small-business loan. “It helped pretty significantly, right away. It was an immediate relief.”

Smallwood said the community stepped up and helped out on social media. “There was a really big bump just going from being dead to being overwhelmingly busy. Completely a surprise.”

And now business is flowing again. “Business is good. We’re picking back up slowly but surely. I am very, very excited about the community,” Smallwood said.

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Smallwod said the process of applying for a paycheck protection loan can be grueling and tedious. And she said business owners must develop good relationships with their banks.

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