CRENSHAW : Redlining Charged in Quake-Aid Policy
After the earthquake that devastated much of Los Angeles last January, Santa Barbara Plaza salon owner Robert Moore literally started picking up the pieces of his business.
Nine months later, Moore is still struggling to recover. He and nearly 20 other shop owners in the mall, located across from the Baldwin Hills Crenshaw Plaza, applied for small business loans but were rejected for aid.
Moore, the Santa Barbara Plaza’s merchant association president, blames the rejections on what he calls redlining practices by the Small Business Administration. He has launched a letter-writing campaign asking local politicians to look into the federal agency’s policies.
“An SBA inspector came out here and told me, ‘Mr. Moore, you have a lot of damage,’ ” said the owner of Moore’s Hair Designs. “I was turned down. Where is all the money, the help they’ve said has been allocated to Los Angeles for earthquake aid? Not in South-Central.”
SBA spokeswoman Diane Brady denied that the agency is turning down applicants based on locale. The most critical factor, she said, is simply a business’s ability to repay.
“In Mr. Moore’s case, he had a bankruptcy, which was explained thoroughly in the letter we sent,” said Brady, whose agency has approved $3.3 billion in loans since the quake, nearly $200 million in Central Los Angeles. “We have a lot more lenient credit standards than banks, but we do need to see an ability to repay.”
Moore, who footed the bill for about $8,000 in damage to his business, said he was initially reluctant to apply for disaster aid or emergency loans. He had applied two years earlier after the spring riots and, despite political promises and wrestling with loads of paperwork, got nothing.
This time he has appealed the rejection of his aid application and has sent letters to Rep. Julian Dixon (D-Los Angeles), state Sen. Diane Watson (D-Los Angeles), Mayor Richard Riordan and Councilman Mark Ridley-Thomas.
“Everyone here suffered damage,” said Moore of the 270 plaza tenants, five of whom have been unable to reopen since the Jan. 17 quake. “We’re all still working with patched-up facilities, cracked walls. We’re holding on by threads.”
Brady said that a business’s cash flow after the quake also figured prominently in loan decisions--which was bad news for Mary Clinton, owner of Shear Creations hair salon.
Clinton closed for two months and paid nearly $6,000 to replace broken glass and repair cracked walls and ceilings.
“I was told I only had cosmetic damage and that I didn’t qualify for a loan,” she said, walking through her airy salon, nearly devoid of customers. “But it’s not just the money. . . . I lost six operators. I’ve had to cancel my insurance because I can’t afford to pay it anymore. I’m still trying to break even.”
In the months after the quake, Bertha Fraser, a business development officer at the Community Financial Resource Center in Los Angeles, advised the merchants to apply for aid.
Fraser said she was at a loss when all the applicants were rejected.
“I know they don’t look like they can pay back a loan on paper, but these loans shouldn’t be judged like regular loans,” said Fraser, whose year-old center provides credit counseling and technical assistance to businesses. The center acts as a liaison between business owners and government agencies like the SBA and is funded by the city and private donations.
“These people are struggling to get back up to pre-earthquake levels. . . . They’re getting deeper in debt.”
Fraser has turned to the First African Methodist Episcopal Church to arrange for a $300,000 loan. “We have to get the business owners help by any means necessary,” she said.
Mark Whitlock, director of FAME Renaissance, said the church’s economic development corporation has agreed to help. “It’s unfortunate that people have to jump through hoops to get help in a natural disaster like the earthquake,” he said. “The merchants shouldn’t have this need to be saved. Ultimately, it hurts the whole community.”
