Small business loans still eluding many Black-owned businesses in Cincinnati

Lack of relationships with banks, accounting firms hinders application process
AJ's Cheesesteaks
Posted at 11:38 AM, Jul 15, 2020
and last updated 2020-07-15 16:57:17-04

CINCINNATI — When the COVID-19 pandemic hit, many businesses across the Tri-State found themselves scrambling to find ways to either stay open or transition their services to an online platform.

“I was worried about my employees, how are they going to survive this,” said Eric Oliver, owner and founder of Beyond Exercise in Oakley.

In mid-March, city leaders banned gyms from serving clients within their facilities as part of the COVID-19 shutdown.

“We’re a service business, so if people aren’t coming through the doors, we are not making any money,” Oliver said.

In an effort to keep his business and staff financially afloat, Oliver applied for the Paycheck Protection Program - a federally funded loan provided by the Small Business Administration. According to, the loan helps businesses keep their employees during the pandemic.

“We were able to secure the loan on the first round,” Oliver said. “Fortunately I had a good banker and she helped us through the initial process, which was extremely stressful at first. The rules just seemed like they were changing on the application. We didn’t know what to turn in. She helped guide us.”

Accessing the application and getting approved was not a reality for every small business that wanted or needed the money.

That was especially true for Black-owned small businesses AJ's Cheesesteaks in Norwood. Owner Ty Velez said when he originally applied for the loan he had a hard time getting help and was denied.

“There was a lot of red tape involved,” said Velez. “I think that it was a lack of relationship with the bank. We are a small, small business. Our budgets are small, our payrolls are smaller, so I think the lack of relationship that goes with that business and that bank was kind of preventing us from not getting callbacks, not getting returned emails, etc.”

AJ's Cheesesteaks wasn’t the only Black-owned business denied a PPP loan. According to the Greater Cincinnati and Northern Kentucky African American Chamber of Commerce, only 30 to 34% of its businesses received the federally-funded dollars.

Chamber president and CEO Eric Kearney said there are four basic reasons why securing the loan has been a struggle for Black-owned businesses.

  • Lack of a strong relationship with a banker.
  • Lack of a strong relationship with an accountant who could prepare financial statements for the business in the format required.
  • Lack of a strong relationship with a lawyer to advocate for the business or to navigate the process of securing a loan.
  • A technological gap, meaning the business doesn't have its records in QuickBooks, or some other type of software and it did not utilize the technology in the way that some other businesses do.

According to Kearney, 90% of African American owned businesses locally and across the U.S. are usually run by one to two people.

“Often times those types of businesses are focused on the business," Kearney said. "Meaning if they are producing widgets they are out there making widgets. If they are making pastries or pies they are out doing that. And there is not a lot of time or resources to do the back-office things or to do those things which will help them develop those types of relationships."

Kearney said, additionally, most of the businesses are not highly capitalized, and do not have a great deal of reserves or shareholder equity.

“There is a gap in terms of wages, technology and education,” said Kearney. “We have to concentrate on, in Greater Cincinnati, relationship building. That is between large and small businesses, white and people of color businesses, wealthy and small businesses.”

Velez of AJ’s Cheesesteaks agrees.

“There was nobody to really talk to or break the process down for us,” said Velez. “To say, 'Okay, who do we need to talk to? Where do we need to go. How do we do this. How do we cut through the red tape?'”

Velez wanted to use the PPP loan money to pay up his rt and get supplies for the business in the event the shutdown prevented him from making money. When he did not get the money, Velez said he relied heavily on the community to stay open.

“It's been the community, 100%, that has come out and supported us, shared our Facebook posts, Instagram posts," Velez said. "They have completely got their friends to come, brought their children, dogs, I mean literally, the community has kept our doors open.”