Why Are So Many Black-Owned Small Businesses Shut Out Of PPP Loans?

Isheka N. Harrison
Written by Isheka N. Harrison
Despite a new round of funding, Black-owned small businesses still find themselves being left out of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). In this April 8, 2020, file photo, a pedestrian strolls past small businesses that are shuttered closed during the coronavirus epidemic in the Crown Heights neighborhood of Brooklyn in New York. As of mid-April, about 26 million Americans had filed unemployment claims in the first five weeks since governments began ordering people to stay home and some businesses to close as a precaution against spreading the virus that causes the COVID-19 disease. It’s already the worst stretch of job losses in U.S. history. New unemployment data to be released Thursday, April 30, 2020, is expected to push that total even higher. (AP Photo/Mark Lennihan, File)

Despite a new round of funding, Black-owned small businesses still find themselves being left out of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).

Among the most botched rollouts of relief in the CARES Act, PPP offers up to $10 million per loan, which can become a forgivable grant if certain guidelines are followed. However, its funding still isn’t reaching the most vulnerable of business owners, according to a NBC News report.

Funds infamously ran out after many big businesses received funding from banks they had pre-existing relationships with, while mom and pop businesses were left in the dust. The problem is magnified for Black-owned small businesses.

“I hear a lot about making America great again. In order to have a great America, there has to be a great Black America. In order to have that, we need great Black businesses. We need access to capital,” Ron Busby, president of U.S. Black Chambers, told NBC News.

With the increased funding, NBC reports the government has also set aside $60 billion for minority and underserved business owners, however Black business owners are still having trouble getting approved.

Terence Dickson owns Terra Café in Baltimore and has been trying desperately to get assistance with his PPP applications. He’s drained his savings to pay employees and is still providing hundreds of free lunches to his community, but still has yet to hear anything back.

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“The financial industry has shown me no love for 20 years,” Dickson told NBC News. “It’s our goddamn money. It’s taxpayer money. … I’m tired of hearing about the money. I want to see the money,” he added, stating this time should be different.

According to experts, the reason Black small business owners are having such a hard time is because of historical structural inequities that still impact Black America today.

Using banks – which have a record of discrimination against Black Americans – to roll out PPP has led to many Black-owned small business owners having no relief in sight.

“There is a structural flaw in this program. It uses banks as middlemen. Any time you create a big program and give banks the ability to choose which customers it prioritizes, you’re going to have disparities,” University of California law professor Mehrsa Baradaran told NBC News. “Credit disparities are where past injustices lead to present disparities.”

Landscaper and Dallas-based small business owner Devin Guinn agreed with Baradaran. Like Dickson, he’s still waiting to hear back about his PPP application.

“It’s completely unfair. This is an economic disaster affecting people no matter what race, religion or socioeconomic level,” Guinn told NBC. “That’s a form of discrimination that plays into the history of America.”