St. Louis area Black-owned businesses could soon access a share of billions of dollars through banking institutions with programs designed to help them.
Vice President Kamala Harris announced Dec. 14, 2021, during the annual Freedman’s Bank Forum at the U.S. Treasury Department in Washington, D.C.
The Grio reported Harris and Treasury Secretary Janet Yellen said financial institutions servicing minority and underserved small business owners would receive $8.7 billion in funding.
That sum is part of a $12 billion the Jobs and Neighborhood Investment Act Harris and Democratic Sens. Cory Booker, Chuck Schumer, and Mark Warner, and U.S. Rep. Maxine Waters, chairwoman of the House Financial Services Committee, pushed through Congress in 2020.
“In America today, deep racial disparities continue to hold people back from achieving all they can,” Harris said in her remarks at the forum. “Today, the wealth gap persists. Today, the homeownership gap persists … access to capital is unequal. Black entrepreneurs are three times more likely to report that a lack of access to capital negatively affects their profit margins. I believe that the actions we are taking, and must take, to address these disparities will define our nation’s strength and economic strength in the 21st century.”
Harris said the resources are intended to address the significant loss of Black-owned businesses and unemployment during the pandemic.
According to a U.S. House Small Business Committee report, Black-owned businesses suffered a 41% drop in ownership between February and April 2020, the largest rate of any racial group.
Black-owned businesses are 20% less likely than White-owned businesses to obtain a loan from a large bank, the report states.
“People think about this as charity or donations when it’s not,” Deputy Treasury Secretary Wally Adeyemo, the first Black person to serve in the role, said. “It’s economics. Investing in these communities makes sense from an economic standpoint.”
Adeyemo said the challenge now is “scale,” which will rely on establishing a technology and data infrastructure to help support financial institutions as they provide funding to generate economic growth for Black and minority-owned enterprises.
Sarah Rosen Wartell, president of the Urban Institute, said her organization released a report Dec. 14 “that highlight challenges beyond simply providing capital such as capital deployment, particularly capital from private and philanthropic sectors.”
“Being capital ready is a huge issue for the businesses, the families, the firms [and] neighborhoods,” she said. “Too little of our attention as a country in the last decade has been focused on that infrastructure so that we can get to the financing programs. Regulatory programs oftentimes do not disaggregate the data about the race of the communities that are being served.”
The Freedman Forum takes its name from The Freedman’s Saving and Trust Company which Congress launched in 1865 to serve as a private savings bank that collected deposits from newly emancipated communities.
According to the National Archives, The Freedman’s Bank had 37 branches across 17 states with a total of $3.7 million in assets equivalent to $80 million today after inflation.
The Missouri Historical Society has documents containing signatures and personal identification data about depositors in the St. Louis branch of the Freedman’s Savings and Trust Company.
National Archives collections explain, “Internal mismanagement, external political manipulation, racial discrimination by state governments and the white financial community, and the Panic of 1873 all quickly drove the Bank into a precarious state.”
During the bank’s final year in 1864, Bank’s last year, publisher and statesman Frederick Douglass became its president, and he invested $10,000 in the institution. Neither Douglass’s reputation nor his money was enough to save the bank. It carried so much debt that most of its more than 60,000 depositors never recovered their deposits.