For years, I have felt that the Small Business Administration’s definition of "small business" is too broad and disqualifies businesses on the lower end of the revenue qualification.
As an experienced CPA. I have become intimately aware that the SBA is extremely conservative in where they lend money. Especially, commercial banks that have an interest in keeping shareholders content by maximizing profits.
I personally applied for the Payment Protection Program and the Emergency Injury Disaster Loan and based on the tepid feedback received from my bank; I ponder if my business is TOO SMALL to have gain access to the capital that is touted as available to me and other small businesses.
Is it reasonable to expect a commercial bank to consider a loan of $300,000 in revenue in need of $30,000 with the same importance as other "small" companies that have $15 million in revenue with a request of $1.5 million? Is an equitable consideration given to all small businesses regardless of annual receipts?
Assuming that banks favor small businesses with higher capital, this can present a challenge for plenty of main street businesses and can be a "death-nail" specifically for black-owned businesses.
Additionally, other challenges such as credit, personal capital, mistrust of banks, the lack of concentration on businesses with lower revenues also create a roadblock for small minority businesses.
One solution to this disparity is to segment the definition of a small business by creating a "main street" description for businesses that are under $1-2M in revenue and build infrastructure to serve the needs of the segment. Although, this wouldn't be a race-specific initiative, taking this action can improve the opportunity for black-owned and other small minority businesses.
When the COVID-19 programs were announced, I honestly believed that my clients would get the funding as advertised, but as things progressed felt that the amounts requested were too small.
Nevertheless, I continued to encourage black business owners to apply, so that if there is a systematic failure to serve the community we have at least gone through the process; while myself and others advocate and represent the voice of these smaller black-owned businesses.