The Michigan-based bank is one of the largest in the US, valued at $29.5 billion. Like many other big companies, Flagstar Bank has committed to supporting diversity in the community it serves and sees no better time to back up its promises than this immensely challenging moment in entrepreneurship. The bank is offering up to $1 million total in grants to small businesses owned by Black, Indigenous, and people of color (BIPOC) whose operations have been impacted by COVID-19. The bank has partnered with BIPOC nonprofits to help distribute the grants, which amount to $5,000 per business.
“We hope to combat the narrative that there is no assistance for minority-owned businesses,” said Dwan Dandridge, the CEO of Black Leaders Detroit, one of Flagstar Bank’s nonprofit partners. “We were founded to serve the entrepreneurs to do more with less. We are proud to team up with Flagstar to help these businesses survive, thrive, and enhance the vitality of our communities.”
To qualify for the grants, businesses must have diverse ownership. They must also have revenues of $1 million or less and a location within Michigan, Fort Wayne, and South Bend in Indiana, or the High Desert of San Bernardino County, California. The application also features some additional qualifications, including what the grant can be used for. Interested (and qualified) applicants can still put their names in for the grants through November 20. Winning businesses will be notified on December 4, with funds dispersed shortly after.
This grant program couldn’t come at a better time as many minority-owned businesses are struggling to stay alive through months of economic shock — and shutdown.
Countless studies and press reports have documented the impact of COVID-19 on minority-owned businesses, though it may be many years before the true devastation can be really accounted for. Between the months of February and April 2020, when the pandemic was reaching its first peak in the US, the number of active business owners fell by 22%, according to a report from the New York Fed. Among those, “Black businesses experienced the most acute decline, with a 41% drop,” the report explains. “Latinx business owners fell by 32% and Asian business owners dropped by 26%.” That’s nearly half of all Black-owned businesses that were wiped out within just one month. A shocking figure by any measure.
The reason minority-owned businesses were so susceptible to the devastation is rooted in the country’s history of unequal opportunities. Entrepreneurs of color are much less likely to obtain funding, sponsorship, and general support in their ventures, making it harder to scale and, ultimately, succeed. Black-owned firms, in particular, entered the pandemic with “weaker cash positions, weaker bank relationships, and pre-existing funding gaps,” according to the Fed report.
As the pandemic wore on, continued disparities stymied recovery for minority-owned businesses. The federal government’s stimulus package, which offered recovery loans to businesses across the country through the Paycheck Protection Program (PPP), did not reach as many diverse entrepreneurs as it should’ve. Per the Fed report, the PPP loans reached only “20% of eligible firms in states with the highest densities of Black-owned firms, and in counties with the densest Black-owned business activity, coverage rates were typically lower than 20%.”
This relative lack of government support exacerbates inequalities and forces other organizations — like Flagstar Bank — to offer up their services. Efforts like Flagstar Bank’s are a vital lifeline to diverse entrepreneurs whose ventures are now facing an unprecedented threat, with no clear end in sight.
“Reversing decades of systemic inequalities is a marathon and we are in it to the finish,” said Flagstar Bank CEO Alessandro DiNello in a recent news release. “These grants are an important milestone along the way to making our communities and our company better and more equitable for all.”
About the Author
Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.