NY Senator Introduces Legislation to Empower Minority and Women-owned Businesses with Microloans
On January 8th, NY Senator Kirsten Gillibrand introduced conditions that would empower minority and women-owned businesses via the Microloan Modernization Act (MMA). She is also 1 of 40 senators, including Patrick Leahy and Bernie Sanders, who have formed a Congressional Review Act (CRA) to challenge the end of net neutrality; a recent topic of concern that could potentially hinder small businesses nationwide. These updated MMA revisions were supported by the mayor of Rochester New York, Lovely Warren, nonprofit community development organization, Pathstone, and local business owners such as Rebecca Hetherington.
Hetherington owns the longest-running embroidery company in upstate New York and thanks to an SBA Microloan, was able to upgrade her firm’s sewing equipment. Hetherington told Spectrum News, “Being able to update is extremely important, but it’s also extremely expensive and the odds that you have that cash flow to walk to the table in order to upgrade your technology and keep growing is a very difficult thing…It helps us bridge the gap, so really, without these loans, I don’t think we would be here.”
SBA Loans Are Unequally Distributed
In 2017, The Microloan program distributed $722 million and $8.4 million, a total of 821 business owners, received loans in New York alone. However, Gillibrand believes that this legislation would make capital easier to access for those who need it most by increasing outstanding limits and reaching a largely overlooked demographic of minority and women-based businesses. Big banks are failing these audiences that may be in desperate need of funding which is why Gillibrand believes alternative lending options must be brought to the table. She discussed these issues earlier this week telling a Rochester News Conference that:
“The lending organizations aren’t making enough loans and they aren’t reaching the entrepreneurs to accurately reflect the population of incredibly diverse communities like the ones here in Rochester. And they are not reaching enough women entrepreneurs — so this bipartisan bill will change that.”
The Need to Strengthen Support for Minority & Women Business Owners
Although the economy has shown signs of recovery benefiting all classes of people, only minimal gains were seen from the lowest bracket. The Federal Reserve reported that since 1992, the bottom 90% of taxpayers have slowly been bringing home less and less income each year. For the first time in history, this sector produced less than half of the nation’s total income. So even though nonwhite households have seen substantial increases in net worth and total income, white households still hold significantly higher incomes and net worth on average. In fact, one of the main reasons minorities have gained so much is because they had very little to begin with. Managing Director of NERA Economic Consulting, Jeffrey Eisenach, agrees on these wealth-gap implications after conducting a report on Latino prosperity released December 2017.
“You’re looking at people with lower net worth, so when the economy recovers, you are going to see them benefit disproportionately as a percentage…If you’re poor and you go through a tough period, you use all your savings to get through it. If you go from having very little to doubling that, you still may not have very much, but you see a big percentage gain,” Eisenach said to the Washington Post.
Net Neutrality & Small Business Owners
In December of last year, the Federal Communications Commission (FCC) repealed the 2015 Open Internet Order which forbids IP’s from discriminating against online content. Because many small businesses depend on the internet for exposure, ending net neutrality is a real threat to the well-being of minority and women-run business owners.
Patrick Leahy of Vermont is one of 40 senators, among them Gillibrand, that have formed a CRA resolution of disapproval on ending the free net and shared at a press conference earlier this week that:
By repealing strong net neutrality rules, the FCC enthusiastically endorsed a pay-to-play internet. Small businesses and consumers in rural areas like Vermont stand to lose the most in this new online order.
As the country shows signs of improvements economically, small business owners are still struggling to get ahead. Senator Gillibrand aims to provide more opportunities for financing women and minority business owners through her Microloan Modernization Act. The MMA may be just the assistance many small businesses need to compete in the future marketplace that is dependent on technology and having the most updated resources to serve their audience.
Photo credit: (U.S. Air Force photo by Staff Sgt. Joseph McKee) and U.S. Small Business Admininistration
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