Black businesses have been mostly shut out of receiving funding from the SBA’s Paycheck Protection Program (PPP), according to experts. Though the program was created to provide coronavirus relief to vulnerable small businesses, Black, women and other minority-owned businesses have been mostly left in the dust, according to CBS News.
“Roughly 95% of Black-owned businesses, 91% of Latino-owned businesses, 91% of Native Hawaiian or Pacific Islander-owned businesses, and 75% of Asian-owned businesses stand close to no chance of receiving a PPP loan through a mainstream bank or credit union,” the Center for Responsible Lending said on April 6 when the PPP began taking applications.
Lack of existing commercial banking relationships, low employee counts and lower sales all play a factor in big banks’ failure to prioritize Black, minority and women-owned businesses in the PPP program.
“[If] participating banks are requiring that applicants have a credit relationship — to already have some type of loan out — that already cuts many of these businesses out,” said Ashley Harrington, the center’s director of federal advocacy and senior council.
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Natasha Crosby is a realtor from Richmond, Virginia who said her bank only began offering applications for the PPP program April 16, the day the initial funding ran out.
“I wasn’t even able to apply and be in a position to be denied. I was essentially denied from the onset because I had been banking with the wrong bank,” Crosby told CBS MoneyWatch.
The program disproportionately favored larger, white-owned small businesses according to research from the Brookings Institution.
“In order to achieve scale and rapidity, they did it through lenders, and lenders rationally said, ‘We’ll start with our existing customers first because we have all of their info,’ and those tended to be larger small businesses,” Joseph Parilla, fellow at the Metropolitan Policy Program at Brookings, told CBS News. “It stands to reason that the way the PPP was structured, approved loans tended to skew toward white-owned small businesses.”
Bakery owner April Richardson’s application for $23,000 from the PPP program was rejected, but it was an outcome she expected.
“I never thought I’d get anything because I am a minority and a woman and own a micro-small business,” Richardson said.