Kansas City minority-owned businesses struggle to receive PPP loans

Kansas City minority-owned businesses struggle to receive PPP loans


KANSAS CITY, Mo. — Minority-owned businesses in Kansas City had a harder time than their white counterparts applying for and receiving federal Paycheck Protection loans, a program set up to help small businesses continue paying employees during the pandemic.

Businesses in majority-white areas of the city received loans at 1.7 times the rate of businesses in majority-Black areas, according to a review of data by the Center for Investigative Reporting.

Chris Evans experienced the struggle first-hand. He said his business – T-Shirt King Inc. – was having its best year prior to the COVID-19 pandemic. But once COVID-19 hit, there was a dramatic decrease in demand for his products – items like group T-shirts and other pieces with logos on them.

“It got real very, very quickly,” Evans said. “I can remember being naive at first, like, OK, it’s not gonna have a major effect. And then all of the orders that were in the pipeline were completed and shipped, and it was like nothing new was coming. You know, the phone’s not ringing. So it’s very, definitely a very, very scary feeling.”

Like other small business owners, Evans looked for ways to stay afloat. He heard about the Paycheck Protection Program (PPP), but rain into an issue right away.

“Some of the large, nationwide banks that operate right here locally had rules or regulations of who they were going to service – and it didn’t include me,” he said.

The national bank that Evans worked with was only giving PPP loans to customers who already had commercial loans with the bank. Evans didn’t have a commercial loan.

That’s when he connected with AltCap, a local community development financial institution focused on bringing capital to small businesses that are overlooked by traditional financial institutions, like banks.

After the first round of PPP loans, AltCap recognized a disparity in which businesses were receiving the loans and which weren’t.

“Businesses that didn’t have banking relationships were were kind of getting shut out,” Ruben Alonso, AltCap president, said.

AltCap went through the process of becoming certified as an official PPP lender.

And with the group’s help, Evans was able to obtain a PPP loan. But he said the pandemic illuminated a lot of issues that existed long before 2020, which led to the disparity in PPP loan distribution.

“Black people have just cause not to trust banks,” he said.

A history of redlining and racial discrimination by banks forced Black entrepreneurs to find other ways to build their businesses.

KC redlining

National Archives and Record Administration

An example of a “redlining” map from Kansas City, ca. 1939.

“Black people have been very creative [with] how they’re able to finance businesses, open businesses, invest in businesses,” Evans said, “and it didn’t include banks. So the fact that you had to go through the bank to get this was a natural hurdle.”

In addition to a lack of banking relationship, many minority-owned businesses were running into another problem, according to Alonso.

“A lot of smaller businesses just didn’t have the resources or expertise to put together a PPP loan application,” Alonso said. “[They] didn’t have the kind of organizational infrastructure to provide financial documents or payroll documents that were needed to to actually apply for a PPP loan. So we were able to help them through that process.”

Evans said the program was not set up for nontraditional business structures.

“PPP was kind of set up to where a traditional paycheck was the best way to process it,” he said. “You know, obviously, they’re trying to prevent fraud. But there’s a lot of businesses that do things differently.”

For the businesses that survived the pandemic, Evans said, he hopes the experience of the past year will put the focus on closing the gaps between minority-owned and white-owned businesses.

“Now the door is open, and we can come in and have some type of relationship, and we can move forward,” he said. “I hope that bank and businesses, especially small businesses, and community-oriented businesses are able to develop true relationships.”

Alonso said this is a chance for Kansas City to help its business community thrive – with everyone included.

“A few years ago, we said we wanted to be the most entrepreneurial city in the country,” Alonso said. “Well, there’s a lot of work to do to get there because it’s got to be a system that works for everybody.”

The PPP loans have ended, but AltCap is accepting new applications for its KC Region Small Business Relief and Recovery Loan Fund, beginning July 15. For more information or to apply for a loan through AltCap, visit the group’s website.

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