Republican American: Conn. embraces discriminatory lending program

Small businesses across Connecticut were devastated by the COVID-19 pandemic, and many are still hanging on by a thread as they seek to rebuild and once again flourish. Now they face a looming recession and grim economic prospects.

These businesses might have recently felt renewed hope when they heard of a new $120 million fund for low-interest loans to small businesses.

But for many business owners, this new hope is in vain. Their businesses will be denied eligibility for the program, dubbed the “Connecticut Future Fund,” not because their business model is less promising or they have less need for assistance, but because of the skin color of their owners.

Let that sink in for a minute. In 2022, in Connecticut, race-based discrimination is back on the agenda.

This new program is not the only one. For instance, the state offers a Minority Business Revolving Loan Fund that offers superior loan terms, but only for minority and women-led businesses. If you have the wrong skin color and gender, don’t bother applying.

These discriminatory programs demean us all, regardless of race. Equality before the law is a foundational American principle. But Connecticut’s racially discriminatory policies unjustly place racial preferences above equal treatment. In doing so, Connecticut reinforces the stereotype that some entrepreneurs are unable to achieve success without special protection, based on a factor having no relation to individual worth. Such stereotypes stigmatize the very business owners that the policies are supposedly intended to help.

Race-based policies also often have unintended consequences. For instance, a few years ago, eight parents in Hartford, represented by Pacific Legal Foundation, successfully fought back against a race-based quota that unfairly — and illegally — denied black and Hispanic children access to high-quality magnet schools. A policy that was ostensibly enacted to help minority students instead served as a straitjacket preventing equal access to opportunity.

These programs are not only unjust, but also unconstitutional. The Supreme Court has repeatedly emphasized that programs that discriminate based on race are incompatible with the Constitution’s guarantee of equality under the law. Government must treat people as individuals rather than as members of racial groups. Laws incorporating racial preferences can only be justified in the narrowest circumstances to remedy intentional government discrimination, and there is no evidence of that here.

It is no wonder race-conscious programs like Connecticut’s have a losing track record in court. Just in the last few years, COVID-relief programs that sought to limit assistance based on race, such as the USDA’s misguided farm loan forgiveness program or Colorado’s small business grant program, have been halted by the courts or repealed in the face of legal challenges.

No one doubts that many minority-owned businesses were hard hit by the COVID-19 pandemic and the associated shutdowns. But the solution is not to segregate aid based on skin color. Instead, Connecticut should focus on creating opportunities for all. Surveys consistently show that Connecticut ranks poorly for business opportunity due to high business costs, a repressive regulatory environment, and low prospects for growth. These factors are likely to stifle entrepreneurship and hit minority communities with particular force.

Rather than employing divisive policies that discriminate based on race, Connecticut should focus on eliminating barriers that raise the cost of doing business and make it difficult to earn a living. It should embrace policies that increase opportunity for all.

This op-ed was originally published at the Republican American on November 29, 2022.