A new survey conducted by the Global Strategy Group for two equal-rights organizations, Color of Change and UnidosUS, reveals that black and Latino business owners are struggling to secure loans under the Paycheck Protection Program.
And while many business owners, including jewelry retailers across the country, have been laboring to secure the business-saving loans, the rates at which minority business owners have received them fall well below the national average.
Only 12% of the 500 black and Latino business owners, all of whom applied for a PPP loan, say they received a government-backed loan. Comparatively, a survey of business owners conducted from April 26 to May 2 by the National Federation of Independent Business found that 38% of small businesses that applied for loans received them.
Economists point to the historically tenuous relationships between minorities and the nation’s big banks as contributing to the disparity. Reports of major banks, including Bank of America, prioritizing or working exclusively with existing customers on PPP loan applications proliferated in the days after the government opened the program.
Also, the Small Business Administration’s now-notoriously fuzzy guidelines for the lending program didn’t include mandates for prioritizing businesses in underserved areas—a failing noted in detail in a May 8 oversight report from the Office of Inspector General. “Prioritizing underserved and rural markets” did not, according to the oversight committee, fully align with the act’s provisions, the report stated. The committee recommended changing PPP loan guidelines to prioritize underserved (minority) and rural markets.
As a result of these, and other, factors, the SBA ultimately handed publicly traded companies $243.4 billion of the $349 billion allocated to small businesses—leaving just around one-third of the funds for bona fide small businesses.
The SBA knows it messed up round one. The second round of funding included $60 billion exclusively for rural banks and nonprofit vendors, which have a history of operating in minority communities. But $60 billion may be too small a log to keep the fires of commerce burning in some underserved communities.
In the Global Strategy Group survey, nearly half of all business owners said they anticipated having to permanently close in the next six months.
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