Data Confirms Minority-Owned Businesses Struggled To Get PPP Loans

Recently released data from the Paycheck Protection Program confirmed the long-held belief that minority-owned businesses struggled to receive PPP loans during the coronavirus pandemic. Many minority-owned businesses didn't receive critical financial support until the final weeks of the program while white-owned businesses were able to get their loans much earlier.

During the first round of the program, the Small Business Administration approved $349 billion in loans. However, many minority-owned businesses were denied loans during the early stages of the program.

“Many of our businesses were being turned down in the first and second round of funding. That caused application fatigue and frustration,” U.S. Black Chambers President Ron Busby said.

Further data showed that six loans were approved for every 1,000 people living in the 20% of zip codes with the largest white population. That is nearly twice the rate at which loans were approved for the 20% of zip codes with the smallest population of white residents.

“Many [minority-owned business owners] are hanging on by the skin of their teeth. Most are in the professional services, small retail shops, restaurants, barbershops,” United States Hispanic Chamber of Commerce President Ramiro Cavazos said.

Of the loans that were distributed, preference was given to businesses with employees other than the owners. As a result, non-employer entities were forced to wait at least one week before applying for a PPP loan. Unfortunately, this measure negatively impacted Black-owned businesses. Of the 2.6 million active Black-owned operations, 2.1 million are non-employer firms.

“This program was made available for payroll and so many firms did not have payroll and did not apply,” Busby said.

Minority-business owners also reported that they often did not hear back after submitting loan applications.

“Many of our Hispanic-owned businesses in the first round never heard back from their banks or were turned down. They had to wait until the second round, and many had to leave their banks and go to a community lender or a nonprofit minority-run agency,” Cavazos said.

The Small Business Administration has not responded to the most recent report.

Photo Credit: Getty Images

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