Second blog in a series exploring the American Jobs Plan 

Since passage of the latest COVID-19 stimulus bill, the American Rescue Plan (ARP), President Biden is seeking support for another of his priorities, the American Jobs Plan (AJP). This expansive bill is focused on growing the economy after the pandemic is over through racially equitable investments in infrastructure, affordable housing, manufacturing, clean energy, small businesses, workforce development and the care economy.   

In an earlier blog post, we discussed some of the proposed policies in the AJP that would help create more affordable housing and what that means for fair housing practices.  As supporting underserved entrepreneurs and small businesses becomes an increasing priority for Prosperity Now, we thought it would be a good idea to take a closer look at provisions in the bill that aim to help these entities.  

The main small business and entrepreneurship policy in the AJP is the $31 billion Biden is calling for to establish programs that give these entities greater access to credit and capital, including funding for community-based small business incubators and innovation hubs, particularly for communities of color and other underserved populations.   

Small businesses are one of the main engines of the U.S. economy, generating 44% of economic activity and creating two-thirds of new jobs annually. While historically there have been far fewer minority-owned small businesses, over the past decade or so, these firms have gained some ground,  growing 10 times faster than their White counterparts, creating jobs, infusing capital and investment into their communities and narrowing the racial wealth divide. 

Unfortunately, the impact of the COVID-19 crisis could erase a meaningful portion of these gains without further support for these businesses. According to the Federal Reserve Bank of New York, a greater percentage of minority-owned businesses were forced to close their doors during the height of the pandemic than White-owned firms. These businesses also received less funding compared to White-owned businesses from the initial rounds of the Paycheck Protection Program (PPP), a loan forgiveness program included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses keep their doors open during the crisis. 

To supplement the relief provided by the CARES Act, the recently passed ARP includes several provisions to support small businesses during what is hopefully the tail end of this crisis, including the Community Navigator Pilot Program, the Restaurant Revitalization Fund and additional funding for the PPP. Importantly, these enactments explicitly state that underserved businesses must receive an equitable share of relief dollars. Later rounds of PPP funding were also amended to make more room for underserved populations.   

As COVID relief like what is offered in the ARP continues to be distributed, it is critical to recognize that this pandemic did not create the inequities that exist between White and minority-owned businesses and communities. These are the product of deeply rooted systemic racism that stretches back to before the founding of this country.  

Because of this history, even before the pandemic, minority-owned businesses had less access to capital and credit, were more likely to be financially unstable and had fewer employees, if they had any at all. These realities made them more vulnerable to the hardships created by the crisis, and we are seeing the results.  

This is where the AJP comes into pay. This bill would provide support for underserved entrepreneurs and small businesses after the crisis is over, to help recover from the pandemic but also, critically, to address the outcomes of the past by providing support even past recovery. By introducing the AJP, the president is acknowledging that the barriers faced by these businesses existed long before COVID-19 and will continue to exist after we get through the pandemic if assistance like what is provided in the Plan is not implemented.  

Right now, the proposal is in the early stages of development and light on details. It is going to be critical to make sure whatever form it takes, the AJP will equitably target minority and other underserved populations that are supposed to be the main priority of the legislation. Prosperity Now plans to keep a close eye on how the administration rolls out the details and will use our voice to push back on any efforts to distribute this funding inequitably. We will also share any important advancements with the Prosperity Now Community.