As the coronavirus pandemic hit America, small businesses across the country were crippled. To respond to the financial crisis, Congress and the White House passed the $2 trillion Cares Act, which included $349 billion in loans for small businesses. That money was gone within 13 days as a result of the unprecedented demand for the loans. Many companies were able to secure loans in the initial round of funding because they had long-established ties to large financial institutions who were able to navigate the loan process, but many Black-owned businesses were shut out of this process because, in part, they didn’t have those same longstanding relationships.
Recognizing the disproportionate impact the loans process was having on Black businesses, Robert F. Smith worked with lawmakers from both sides of the aisle to make sure Black-owned small businesses were able to gain access to the same loans that white businesses received. Drawing on his connections cultivated from years of charitable giving and financial leadership, Smith worked with Democrats and Republicans to find a solution in the next round of loans.
Congress and the White House agreed to create a $10 billion set aside pool of money for Community Development Financial Institutions, also known as CDFIs, non-traditional entities that often lend to Black-owned businesses when banks won’t.
Smith stressed the importance of “set aside” funds to his lawmaking allies. The first batch of the Payment Protection Program funding was a free-for-all, and helped cause the gap in loans between Black businesses and their white counterparts. Creating more structure in the second round would ensure that Black businesses weren’t closed out of the process.
Beyond securing additional and more effective funding from lawmakers, Smith also engaged with Black businesses owners to help ensure they were navigating the complex process successfully to receive the loans. Smith teamed up with Black celebrities such as actor Jamie Foxx, basketball legend Magic Johnson, and actresses Meagan Good and La La Anthony to film public service announcements from their homes during the shutdown, encouraging Black business owners to apply.
That push helped spread awareness before the second round of funding. Black-owned businesses that were able to secure loans as part of the second round of funding reported being aware of the options because of Smith’s awareness blitz.
Read more about Smith’s efforts to help Black businesses secure loans during the coronavirus pandemic.