The Payroll Protection Program PREP (PPP PREP) is a collaborative initiative among local chambers of commerce, business service providers, CDFIs, banks, and funders to provide PPP preparation services to Black and brown Owned small businesses to get them ready for stimulus dollars. PPP PREP focuses on outreach to support the businesses who missed previous rounds of PPP loans. The program aims to serve as a lifeline for local Black- and brown- owned business owners to complete their PPP applications.
PPP PREP-Kansas City is currently a partnership effort with the City of Kansas City KC BizCare Office, the Prospect Business Association of Kansas City (PBA) and the Heartland Black Chamber of Commerce. Each group will reach out to their constituencies with a five-step process for getting minority-owned businesses prepared for PPP First and Second Draw Loans:
In addition to this process, the Heartland Black Chamber and Prospect Business Association have identified service providers to help achieve the plan. They will be tasked with providing technical assistance to local minority owned businesses and helping with upfront paperwork.
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In May 2020, during the second round of PPP deployment, our office, along with local minority chambers and business associations, issued a piolet survey to local small and minority businesses in Kansas City on the impact of COVID-19 and access to capital. The group worked collectively to share information and resources to its members and provided technical support to area businesses filing for disaster loans. Based on the responses from the survey, the report indicated that businesses who had existing relationships with a bank or organization were 38% more likely to be approved for a loan and sought out 8.3x more capital when applying.
At the time of the survey was administered, organizations predicted Small Business Relief programs through mainstream financial institutions may be less relevant to under-banked and unbanked. Minority owned businesses were already experiencing financial distress prior to COVID-19. Our survey reported the following amongst its respondents as it pertains to accessing capital:
Many of the KC entrepreneurs utilized their personal savings and high interest credit cards as a method of obtaining capital: Savings 51%, Credit Cards 44%, Non-Traditional Loan/Grant Programs 34%, Borrow from Friends and Family 30%, Unemployment Assistance (Sole/Contractors) 23%, Traditional Commercial Loans 20%, CDFI 19%, None 14%
Lack of small business banking relationship and capital readiness (Small Business Banking): 97% of respondents have existing bank accounts vs. 3% who reported not having a bank account. 45% have Never Applied for a Bank Loan and 17% said they were Denied a bank loan prior to COVID-19
KC entrepreneurs requested more relief funding from traditional bank loans versus SBA loans. (Total Amount of Capital Applied for Loan/Grant Program): Traditional Commercial Bank Loan applications came in the highest $6.44M; SBA Loan Applications totaled $3.23M, Non-Traditional $1.58M, CDFI $330K
Loan Applications: Most survey respondents applied for SBA Loans for relief•Respondents were granted approval highest with SBA Loans (Application Status): SBA: 74% Approved, 9% Awaiting Funds, 18% Denied; Non-Traditional: 38% Approved, 8% Awaiting Funding, 54% Denied; CDFI: 27% Approved, 7% Awaiting Funding, 67% Denied; Traditional: 60% Approved, 40% Denied