COVID-19 has proven to be an equal opportunity menace, killing people of all races and ethnicities.
Government shutdowns put in place to slow its spread have hurt small businesses in every corner of America, but in Oregon, the state legislature established a relief fund for Black people. The Oregon Cares Fund uses $62 million from the federal CARES Act for grants. To be eligible, individuals, families and businesses must live in or be based in Oregon, demonstrate hardship due to COVID-19 and self-identify as Black.
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Joy Mack, owner of Jayah Rose Salon & Spa in Portland, went $30,000 into debt during the three-month COVID lockdown in Oregon. She called her Oregon Cares Fund grant a lifeline.
“When you go for other types of loans, there’s a little extra scrutiny,” Mack said. “I’ve experienced it more than once myself, we [Black business owners] have a little more difficult time accessing resources.”
Tyler TerMeer sits on the Council of Trust, established by The Contingent, a private community organization that lobbied for the fund to be created. The Council of Trust vets the grant applicants and make grant decisions to distribute the $62 million.
TerMeer and other Black leaders lobbied Oregon politicians for the relief fund for Black business owners as a call for social justice.
“We are allowing folks for the first time to gain access to new resources that will allow them to live and thrive, and allow their businesses to access resources that they had barriers to reaching in the past,” said TerMeer.
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But two lawsuits have been filed on behalf of a Oregon business arguing the fund violates the Equal Protection Clause of the 14th Amendment, which was passed after the Civil War and aimed to dismantle racial segregation.
Edward Blum, who represents the owner of Great Northern Resources, a timber salvage company in John Day, Ore., said the pandemic has cost Great Northern $100,000 and his client, who is White, should be eligible to apply for any government assistance. He calls the Oregon Cares Fund polarizing, unfair and clearly illegal.
“If the state of Oregon wants to target adversely impacted businesses, then fine,” Blum said. “But help Hispanic businesses, Asian American businesses, Native American businesses and White businesses that have been adversely affected, not just Blacks’, that’s unconstitutional.”
The Legislative Counsel Committee, which advises the state legislature on legal matters, seemed to agree. In July, it was asked for a legal opinion on the Oregon Cares Fund and wrote that a race-based fund is subject to “strict scrutiny” and must be “narrowly tailored.” It concluded that without strong evidence to justify the fund, “the program would almost certainly be unconstitutional under the Fourteenth Amendment.”
The legislature may have relied on a study conducted by a professor of economics at University of California Santa Cruz. Robert Fairlie found nationwide that Black-owned businesses were going out of business at more than twice the rate of White-owned businesses in the early part of the pandemic. Forty-one percent of Black-owned businesses went under between February and April compared to 17% of White-owned businesses. And 32% of Hispanic businesses failed while 25% of Asian businesses went out of business.
Nkenge Harmon Johnson of the Urban League of Portland blames racism. “It’s a sad fact that Black-owned businesses and would-be entrepreneurs do not have the same access to capital as other folks in the country,” Harmon Johnson said. “Banks have discrimination and bias baked into their systems.”
But Fairlie’s ongoing research shows a resurgence in Black-owned businesses after the lockdowns lifted.
By the end of September there were actually 2% more Black-owned businesses than before the pandemic. The number of White-owned businesses has dropped 1% since February while Asian-owned businesses are down 17%.
There are slightly more Hispanic businesses, and Maria Garcia owns one of them. The Revolucion Coffee House in Portland still is struggling to survive financially. She sued over the Oregon Cares Fund, writing on Facebook, “This lawsuit is not anti-Black or pro-Latino … but a lesson for our elected officials that the state has to be inclusive in all its decisions and offer equal opportunities to access funds.”
Garcia, represented by the Center for Individual Rights, has been criticized by some leaders in the Latino community who called on her to drop the lawsuit. Garcia replied with a scathing statement: “They should have asked me what happened to my business. Instead they attack me for challenging an unjust program that prohibits me from even applying for aid because of my race.”
To date, the Oregon Cares Fund has disbursed about half of the $62 million. Most of the remaining money already has been approved for grants. So it’s likely all the COVID relief cash will be gone by the time a court decides the legal aregument.