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Fewer PPP Loans For Small Businesses In South San Diego County

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While more coronavirus relief for small businesses is likely in store as Congress works on another round of loans under the Paycheck Protection Program, some storefronts in underserved communities south of I-8 couldn’t get any money during the last round.

Speaker 1: 00:01 Small businesses are bleeding in San Diego County. As the pandemic rages on more Corona virus relief is likely in store though, as Congress works on another round of loans under the payment protection program, known as PPP, our partner station, KPCC mapped the winners and losers in the race for those loans, KPBS investigative reporter on meta Sharma notes, some businesses in underserved communities, South of interstate eight at a tough time getting any money.

Speaker 2: 00:33 My name is Andrew [inaudible]. I own caffeine at cafe and I applied for a PVP loan back around April

Speaker 1: 00:40 One month into the pandemic. And one year into his long held dream of owning a business. His city Heights coffee shop sales dropped by half

Speaker 2: 00:50 People decided not to go out anymore.

Speaker 1: 00:52 96 year old Benevidez hoped to use the federal loan is a lifeline to cover rent utilities, inventory, everything that keeps the business afloat, but officials told him he wasn't eligible

Speaker 2: 01:06 To them at the time. I didn't fall under one of their qualifications, which was having employees,

Speaker 1: 01:13 Mom, and pop stores, and one man shops such as Benevidez Kathina often have fewer than 10 employees. Having fewer workers made it harder to qualify for badly needed government aid.

Speaker 2: 01:27 Also, the rules kept changing

Speaker 1: 01:29 [inaudible] is executive director of the city Heights business association.

Speaker 2: 01:33 It's just not a good situation for small businesses,

Speaker 1: 01:38 Especially in some poor communities of color like city Heights, which received a total of 317 lungs. That money, according to federal data helped save around 1500 jobs in contrast Claremont, North of eight and where more than half the population is white got 800 loans and retained over 3,600 jobs. Claremont's population is actually just under a quarter smaller than city Heights area blamed that wide gap on many small businesses, lacking access to accountants, lawyers and bankers who can help navigate what may be for some, a complex bureaucratic process. He also blamed poor loan outreach in areas that are low income of color and ethnically mixed

Speaker 2: 02:25 The city Heights. We have a community that is extremely diverse with many first generation immigrants that are entrepreneurs, very entrepreneurial, but they come from countries where they don't trust the government for very good reasons. And they're not used to dealing with government agents too.

Speaker 1: 02:43 There are also big margins and the number of PPP loans given out to some cities North and South of the eight freeway Chula Vista got 2200 PPP loans and saved over 21,000 jobs. Carlsbad businesses obtained 3,400 lens preserving more than 38,000 jobs as Candido appears to be an outlier. The North County ethnically diverse city secured 2100 loans and held on to 32,000 jobs. It's one of the cities that was more efficient in a key goal of the program. Job preservation

Speaker 2: 03:21 Like Escondido alcohol and Lamesa they're small businesses saved over six and a half jobs per loan. Whereas in Encinitas, for example, it was only 4.4 jobs per loan

Speaker 1: 03:35 SDSU business lecture. Mira copex says overall, the distribution of loans was aligned with the distribution of businesses in the County. COPEC agrees. The government should have done a better job in letting underserved communities know the loans are available and how to apply, but he adds that the PVP still served its mission in getting small loans out to small businesses.

Speaker 2: 03:58 The number of loans less than 150,000 is 85% of the PPP loans that were processed in San Diego.

Speaker 1: 04:05 As for Benevidez. He says, he'll apply for the next round of PPP loans.

Speaker 2: 04:11 You don't need too much, but we still need a lump sum just to keep our lights on. Joining me is KPBS investigative reporter

Speaker 1: 04:19 Sharma I'm Ethan. Welcome to the program. Thank you. It's good to speak with you, Maureen. So a business needed employees to qualify for the paycheck protection program. Is that right? That's right. I mean the whole goal of the program was to save as many jobs as possible basically to make the most of the loan. And I believe across the County businesses that received the PPP money saved an average of 5.5 jobs per loan. Um, I think in the city of San Diego businesses saved an average just by 0.1 jobs per loan. And then there were businesses in Escondido, in El Cahone that were actually able to save six and a half jobs per loan. Wow. But that leaves out single or two owner businesses to the people

Speaker 2: 05:11 You spoke with know about the qualifications when they apply.

Speaker 1: 05:16 Well, I don't think that Andrew Benevidez knew he's the owner of caffeine, but in talking to him and others, one of the criticisms they had about these lens is that look saving the most jobs per loan, not withstanding the feds have got to acknowledge. They've got to consider that there are sole proprietors and others who have plunked down their life savings into these businesses. Like Benevidez his coffee shop and mom and pop shops. And even though they may have no employees or just a few workers, that doesn't mean that they haven't been effected by this pandemic and they need financial help. They've lost customers too. You know, uh, there are lawyers and accountants who are one person businesses they've lost clients. And that should be a factor when giving out these loans,

Speaker 3: 06:12 What were some of the other qualifications that small businesses may have had a difficult time with when applying for these loans?

Speaker 1: 06:20 Well, the rules kept on changing on the maturity date of the loans, um, and how much, and under what terms or circumstances the loans would be forgiven. I think people had to provide documentation that their businesses had fallen off by a certain percentage. And again, when you're a tiny business outfit, your payroll, your accounting records may not be as complete or as well documented as some of these larger businesses. Amiga whatever.

Speaker 3: 06:49 Can you tell us about the disparities revealed in this map of who got PPP and who didn't

Speaker 1: 06:56 Well to have Vista received 2200 PPP loans and saved over 21,000 jobs, uh, Carlsbad businesses got 3,400 lens and they were able to save 38,000 jobs. We can not explain that difference to live. Vista is a huge business hubs. You know, Maureen, so is Carlsbad, but it's, it's, it really is hard to draw any hard and fast conclusions because we don't have any information on how many businesses in these areas applied for the lens and were actually turned down. I do know nationally there has been a lot of concern that minority owned businesses weren't getting access to PPP money. But the problem as I've said is we just don't have enough information on the PPP borrowers. Although there has been quite a bit of reporting on minority owned businesses, complaining that they were just rejected off the bat when they applied for these lines. And I know that there have been many news articles saying that minority owned businesses were not prioritized in a way that certain bags prioritized wealthy businesses.

Speaker 3: 08:13 Were there any other sources of relief that these smaller businesses could draw on?

Speaker 1: 08:20 There were, uh, the city of San Diego, um, set aside $6 million to create the small business relief fund. The state of California has set aside $50 million, um, for small businesses and, you know, Angie Benevidez, he received a small grant from just, uh, a group of groups. If you will, who came together to raise money for small businesses in underserved communities, because they knew that they would be shut out by these loans. They weren't going to be able to compete for these loans for all the reasons I've outlined.

Speaker 3: 08:59 Now, where can people see this interactive map of PPP loan distribution in San Diego?

Speaker 1: 09:06 Well, they can go to our website, KPBS dot Oregon, click on my story. And the map is embedded in that story.

Speaker 3: 09:14 I've been speaking with KPBS, investigative reporter Amica Sharma Amica. Thank you,

Speaker 1: 09:19 Maureen. Thank you.

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.