PayPal has just deposited $50 million in an account at Optus Bank, a minority-owned institution in Columbia, S.C., that has $155 million in assets.
As unlikely as this pairing may sound, it happened relatively quickly. In June, PayPal announced a $530 million commitment to support minority communities and businesses in the U.S., especially those hardest hit by the pandemic, to help address economic inequality.
Dominik Mjartan, Optus Bank’s CEO, obtained a contact at PayPal through a friend and set in motion a conversation through which the San Jose, Calif., payment giant made Optus one if its recipients.
In an interview, Mjartan told the story of how the new funding came about, what he intends to do with it and why so many financial hurdles still exist for Black-owned businesses.
It sounds like with this new money, you’ll be able to provide more capital to small businesses, especially those facing systemic barriers to mainstream funding. In your view, what are those barriers?
DOMINIK MJARTAN: Where do I start? Study after study shows that your ZIP code does determine your access to capital and opportunities. Where you live and where your business is located does impact your ability to access credit. So that’s one systemic barrier. Who is predominantly located in those communities that have significant disadvantage in accessing equitable opportunities? They’re predominantly communities of color, immigrant communities, low-income communities. So right off the bat, we’re seeing this disparate access to credit, capital and opportunities just by the ZIP code, the census tracts.
It is illegal to redline, right?
So why is it still happening?
Redlining is related to branch location. Where do most banks close their branches? In low-income communities. If you’re not extracting the positives from the community, you really don’t have to serve it.
I know people are worried that banks will close more branches in low-income neighborhoods in the wake of the pandemic.
Yes. Also, when you think about the five Cs of lending [character, capacity, capital, collateral and conditions], every one of them is impacted by systemic disparities in this country. Whether you have capital, whether you have credit. If you grew up in a low-income community but you aspire to be an entrepreneur and you didn’t inherit a house or wealth or your father-in-law didn’t loan you money, or your grandfather didn’t loan you money, or you don’t have access to financial and social capital, right out of the gate, entrepreneurs in communities of color or low-income communities have a lot less to bring to the table.