(City Journal) COVID-19 has devastated small businesses nationwide, and New York’s entrepreneurs and landlords have been particularly hard hit.
In response, Governor Andrew Cuomo has awarded millions of dollars to affected small businesses through the New York Forward Loan Fund. But to get these taxpayer-funded loans, it helps to be a minority-owned business, as designated by the state, because Cuomo’s office has announced that it will be “focusing on” Covid relief for minority- and women-owned firms.
Relief was welcome news for those receiving grants, but small-business owners unable to obtain aid may feel like they have been shunned because of their race.
It’s only the latest example of how New York politicians, in their fight against racial discrimination, have established a new system of racial prioritization.
They may find that their efforts run afoul of the Constitution.
It’s not just the emergency-loan program. Racial discrimination is now a primary consideration for bureaucrats engaging businesses to build state roads, highways, and bridges…
Those seeking to take advantage of the New York law must undergo an onerous process to get the government to certify their minority status.
This process varies state-by-state, but some states require businesses to submit three declarations from “recognized minority or ethnic community organizations” confirming that the applicant is a member of their community.
Even with these verification requirements, fraud is rampant in set-aside programs for minority-owned businesses.
One investigation in Washington State identified a substantial number of businesses designated as “minority-owned”—hauling in millions of dollars from state government contracts—that should never have qualified for minority status.
The investigation also found contractors “blatantly gaming the system by obtaining contracts because of their minority status, only to have larger companies perform the actual work.”
