Vice President Kamala Harris said Wednesday that the U.S. economy is being driven by the ambitions of small business owners and announced the Biden administration is renewing and expanding a pilot program to help underserved entrepreneurs access capital.
what you need to know
- Vice President Kamala Harris announced Wednesday that the Biden administration is renewing and expanding a pilot program to help underserved entrepreneurs access capital
- At an event at Howard University in Washington, Harris said the Small Business Administration’s Community Advantage program, which was scheduled to end in September, will be extended through September 2024
- The Biden administration is also lifting a four-year moratorium on lenders in the program and increasing the maximum loan size from $250,000 to $350,000
- The event was hosted by the Greater Washington Partnership, which announced that more than two dozen organizations have pledged $4.7 billion over five years to power the growth of inclusive businesses in the capital area
At an event at Howard University in Washington, her alma mater, Harris said the Small Business Administration’s Community Advantage program, which was scheduled to end in September, will be extended through September 2024. The Biden administration is also lifting a four-year moratorium on lenders in the program and raising the maximum loan size from $250,000 to $350,000.
The pilot program was launched in 2011 during the Obama-Biden administration to provide credit, management and technical support to small businesses in underserved markets. The goal is to provide federal loan guarantees to “order-driven lenders”—primarily nonprofit organizations focused on economic development.
“Small business owners work morning and night to turn an idea into a reality,” Harris said. “And that energy, of course, drives our entire nation forward. It creates jobs. It drives innovation. It accelerates economic growth.”
But, she said, “America today is also leaving too many small businesses and too many entrepreneurs behind.”
According to Stanford University’s Institute for Economic Policy Research, black entrepreneurs are three times more likely to say they did not apply for a loan because they feared their application would be rejected.
Harris also said that black and Hispanic entrepreneurs are less likely than white applicants to receive small business loans from traditional financial institutions, people in rural and tribal communities do not have access to traditional banking services, and Asian Americans face language barriers that limit their ability to access capital .
That’s where community lenders come in, the vice president said. Because they often live in these communities, they better understand the entrepreneurs’ vision, she said.
Harris told the story of a small business owner named Rain from Oakland, California, whom she met last year. Rain wanted to buy a van for her catering business, but was told by a traditional bank that she was “unbankable.”
“Rain wasn’t put off by a word and went to a community lender and naturally that lender saw her vision to build a catering business that produces fresh, local and sustainable food that is prepared with love and served with care” said Harris . “And of course they gave Rain that loan to buy that van. And today, Rain operates one of the most successful catering businesses in Oakland. She’s catered for clients from the Mayor to the Golden State Warriors.”
The Biden administration also announced Wednesday that it was removing restrictions that barred those with criminal backgrounds from the Community Advantage program and simplifying underwriting and collateral requirements — including raising the maximum unsecured loan size to 25,000 USD to $50,000 – which have disproportionately impacted underserved borrowers.
“If we’re talking about how we’re doing as a nation and the strength of our nation, and we’re looking at the strength of our economy as a measure of that, then we have to ask, how are small businesses doing?” Harris said. “And are we doing enough for them?
“Let us all continue to work together to address the injustices that stand in the way of our communities’ ambitions and aspirations,” she added.
The event was hosted by the Greater Washington Partnership, which announced that more than two dozen organizations have pledged $4.7 billion over five years to power the growth of inclusive businesses in the capital area. Participating companies include heavyweights such as Amazon, Bank of America, Capital One, JPMorgan Chase & Co., Northrop Grumman Corp., the Washington Commanders soccer team and Wells Fargo.
Trade Secretary Gina Raimondo and Isabella Casillas Guzman, Head of Small Business Administration, also attended the event.
“Homogeneity is the enemy of innovation,” said Raimondo in her remarks. “Think about it for a second. It’s true. If you have people who all have the same background, the same ideas, and the same viewpoints, you won’t innovate. If we really want to realize the full potential of our economy, we must work for justice.”
