Case Study: How Evolve Bank used Middesk and Alloy to accelerate PPP loan processingDownload Now
by Ian Harriman
In the aftermath of George Floyd’s murder and weeks of worldwide protesting against systemic racism, white supremacy, and the police - there’s a calm wind of business-as-usual, blowing across tech and corporate America. The media and friendly corporate PR teams are already directing attention to the next click-worthy scandal (have your Facebook ads seemed different today?) while institutions commanding opportunity in the US have gone pretty much unscathed in the last four weeks.
As we thought about how we should respond to what's going on in the world, we first had to be honest. Middesk is a small company today made up of a handful of people, none of whom are black. We have a lot of work to do. To speak on what’s going on today, or offer solidarity in the form of a matched donation to an organization, just didn’t seem right. We haven’t earned the right to participate in the conversation because we haven’t helped keep up our end of the bargain as a business; we haven’t benefited our community the way we should. In order to stay true to our budding culture and values here at Middesk, we did what we do best - we got to work.
For some framing on what's going on in our industry, the reaction to COVID-19 resulted in huge sums of money going to financial institutions in the form of PPP loans this year. In fact, demand was so large that legislators rushed to replenish the program with $310 billion in April. The first-come, first-serve nature of these loans has resulted in uneven disbursement with an unclear impact to communities and people. Just 12% of black and Latino business owners who applied for PPP (Paycheck Protection Program) loans reported receiving what they asked for, according to a survey by Global Strategy Group. Nearly half of these individuals claim they anticipate being forced to close permanently in the near future. This reality underscores the historically abhorrent relationship minority business owners have with banks and financial institutions at large.
Offering a solution to this mess is not something we can build in a couple of weeks. In fact, organizations have been working for decades to offer solutions directly addressing these issues from a regulatory/reforms perspective. The Community Reinvestment Act (CRA) is the marquee piece of legislation enacted in 1977 for a simple purpose: encouraging banks to invest the deposits they receive from communities back into those communities. The CRA was a response to overt redlining and the tendency of banks to make loans where they were most profitable, regardless of community needs. However, the impact has been hard to measure and there have been talks of reforms as of late, adjusting the current system to more of a metrics-based system.
So in that vein, we want to start sharing our data to banks, lenders, fintechs, community leaders, and anyone else who wants to support small, economically, and socially disadvantaged businesses.
How are we doing this? Check out our new Community Businesses Tool!
We’ve indexed 70.5 million business records, 1.4 million small businesses, and 24,000 government certified small, economically, and socially disadvantaged businesses 8(a), and built a tool that you can use to get a sense of the identity of businesses around you in your community that you may interact with.
We all have our lane, and while Middesk earns the right to enter some of these larger conversations, we’re going to stay in ours and help add some transparency to the interactions we make every day with businesses in our community.