How PPP loans missed the mark with Philadelphia’s Southeast Asian business owners

Hor Chou wants someone in charge of coronavirus business relief to walk along South Seventh Street to gauge the need of the corridor’s storefronts.

The buzzing strip of grocery stores, jewelers, cafes, dress shops, and salons catering to Philadelphia’s Southeast Asian population was, like many local business districts, rocked in the early days of the COVID-19 pandemic.

And even today, more than two years since the pandemic first hit, many of those businesses have not fully recovered.

When the federal government released hundreds of billions of dollars in aid as part of the Paycheck Protection Program, details trickled in slowly to the area’s mostly Cambodian and Vietnamese businesses.

“Information that is needed for survival, or information that is needed for economic stability, comes to our community too late,” Chou, owner of New Happy Garden takeout restaurant, said through a Khmer [Cambodian language] interpreter.

Interviews conducted over the span of more than a year with Asian American small-business owners, community groups, corridor managers, and local government officials revealed barriers that prevented Asian American/Pacific Islander (AAPI) monolith entrepreneurs in Philadelphia from obtaining PPP loans or slowed their process of receiving financial assistance.

Those challenges ranged from language barriers and digital literacy to banking relationships and even cultural attitudes. In some cases, something as simple as not having an email address deprived businesses of the opportunity to receive assistance.

Chou, president of the Cambodian American Business Community, estimates that there are about 40 Southeast Asian-owned businesses on his corridor, which runs from Jackson Street to Oregon Avenue.

In the census tract covering Wolf Street to Oregon Avenue, forgivable loans went out to 14 different South Seventh Street businesses, a group that included numerous independent contractors and sole proprietors, according to data collected by Metro Philadelphia, The Inquirer, and Resolve Philly.

Irza Hajati, who lives in South Philadelphia, did not even seriously consider applying for a PPP loan.

She immigrated to the United States along with her husband, Aditya Setyawan, from Indonesia two decades ago, and together they run a catering business, Pecel Ndeso.

Pecel Ndeso prepares food for weddings, sets up at festivals, and delivers orders to clients in New York and Washington. Last summer, they joined the popular Southeast Asian Market at FDR Park.

Hajati said she was too busy with her son’s online schooling at the height of the pandemic to consider business-relief programs, even though Pecel Ndeso was struggling. She was also focused on providing free food packages to food-insecure members of the city’s AAPI communities, formerly through Kampoeng Indonesia and currently with Gapura Philadelphia, the area’s first Indonesian community nonprofit that the couple cofounded.

“The other reason is because we don’t have a real business, like a restaurant,” she said.

But the catering business, which was established in 2004, is her full-time job, and PPP was open to sole proprietors and self-employed persons, regardless of brick-and-mortar presence.

A joint data analysis among Resolve Philly, the Metro, and The Inquirer attempted to understand the distribution of PPP loans among AAPI businesses in Philadelphia.

But lenders were not required to collect or report racial or ethnic information on business owners to the federal government, which means barely a quarter of the data could be used to directly determine how many AAPI-owned businesses received loans.

This means the data alone cannot indicate any disparities in the largest effort to aid businesses in the pandemic.

However, initial PPP relief flowed disproportionately into majority-white communities, according to research conducted by Robert Fairlie, a University of California Santa Cruz economics professor, and Frank Fossen, a University of Nevada, Reno professor.

Much of the money from the program’s first round, in April 2020, went to businesses with long-standing banking relationships or was sent through financial institutions in rural areas, they wrote. Distribution to minority communities was better in the second round and improved significantly in the third round in 2021, when the Biden administration reopened PPP exclusively for businesses with fewer than 20 employees for a two-week period.

“Did that delay make a big difference? We don’t know,” Fairlie said in an interview. “We just don’t know the answers to those questions.”

The Resolve Philly, Metro, and Inquirer analysis did find that, locally, the number of loans, as well as the average loan amount, changed significantly for AAPI business owners based on whether the business was located in a census tract that was majority-white or majority-Black.

In mostly white census tracts, the median loan was more than $20,000 — and among 10,472 loans that came out to more than $320 million. In tracts where the largest demographic was Black, there were only 3,466 loans which were usually around $19,165 and totaled $66 million.

Dan Tang, owner of Tang Pharmacy in Olney, a diverse area where 46% of residents, a plurality, are Black, said he believes the neighborhood generally receives fewer resources.

“Like if you look at certain pockets in the city, they’re blooming,” he said.

Fern Rock Hardware, also in Olney, received about $5,000 in PPP money, and owner Justin Lee, through a Korean interpreter, said he applied for only one of the program’s two rounds of funding.

He explained that he likely would have had difficulty going through the process at all without the help of the North Fifth Street Revitalization Project, a neighborhood business group, and Noah Bank, a financial institution in Elkins Park serving the Korean community.

Other AAPI small-business owners were not as successful as Lee, primarily due to language hurdles and technology challenges.

The city’s AAPI communities are far from a monolith, with dozens of languages and ethnicities.

“It’s not like Hispanics,” said Narasimha B. Shenoy, founder and chairman of the Asian American Chamber of Commerce of Greater Philadelphia. “They have to just interpret Spanish. We have to do a lot more than that.”

Chou said details involving government programs are rarely available in Khmer, Cambodia’s most widely spoken language.

The disconnect extended to information about the pandemic, including COVID-19 vaccines, according to Nary Kith, who runs KITHS, a local Cambodian social services organization.

“People were so afraid that, if they contracted COVID, that’s it,” she said. “That’s a death sentence.”

Even for more widely spoken languages in the United States, PPP instructions weren’t initially available.

James Wang, president and CEO of the Chinatown-based Asian Bank, said an application was not available in simplified Chinese until at least midway through the first round of loans.

“We have a lot of clients that really don’t speak the language,” he explained. “I think that, for one, is a huge barrier. And then for them to go online and access anything that’s in English is very challenging.”

Elisa Kim, whose family owns T-House Inc., a screen printing shop in Olney, said many neighboring business owners do not have an email address, a concern echoed by Kith, Shenoy and others.

“With all these applications that require you to have an email and for you to check your email on a regular basis, that’s not something some people are familiar with,” said Lamei Zhang, former projects manager for the Philadelphia Chinatown Development Corp.

A lack of digital literacy further inhibited some businesses along South Seventh Street that did not have websites, let alone the sophisticated online ordering systems that have become commonplace during the pandemic. In addition, many AAPI-owned businesses, particularly mom-and-pop shops, had trouble getting financial statements and up-to-date tax forms prepared.

Even when they could locate those documents, some business owners were hesitant to hand them over to the federal government or they were not willing to ask for assistance, Shenoy said.

“They’ll not come out and look for help. Only a few of them do,” he said. “That is the culture. It’s a pride.”

“As you get closer to the ground level and you get closer to the smallest types of businesses, the biggest barrier for most people, I think, is trust,” said James Onofrio, a program manager at the Philadelphia Department of Commerce.

Onofrio, who works closely with corridor business managers, said some shop owners are suspicious of government help, based on their experiences as refugees from Vietnam, Cambodia, Laos, and Indonesia.

Though none of the business owners that spoke to the Metro and Inquirer personally experienced firsthand AAPI bias or harassment, it’s difficult to measure how attitudes around the virus may have impacted cash flow.

“A double whammy,” Shenoy added, referring to the pandemic’s toll on all small businesses combined with anti-Asian sentiment.

Community leaders said there needs to be more awareness of the barriers facing AAPI business owners, perhaps particularly in light of the “model minority” myth — a belief that Asian Americans are more successful in work and school than other people of color.

“I think the pandemic was a wake-up call for the city in just seeing where there isn’t enough access, especially for immigrant communities,” said Stephanie Michel, executive director of Olney’s North Fifth Street Revitalization Project.

“It should be a priority to make sure that those immigrants have access to information and funding as well, especially when the world is falling apart, literally, and impacting businesses,” she added.

Julie Christie and Diana Lu contributed to this report.