Minority Firms Face More Barriers For PPPs, Report Says
As the White House and Congress continue to discuss a new relief bill, we are learning more about how the last one unfolds, particularly with regard to the Paycheck Protection Program.
A new report from the House subcommittee on the coronavirus crisis found that the Treasury Department suggested that banks should favor their existing customers when they applied for paycheck protection program loans. This meant that some businesses, especially those owned by women and minorities, were being left out.
In April, J. Craig Gordon attempted to apply for a P3 loan from a bank for the home health care company he runs in Savannah, Georgia.
“It was not a situation where we could even get a request,” he said.
He had no relationship with this bank. He tried to apply through another bank. No luck there either.
Gordon cut his own salary and put his expansion plans on hold.
“The next layer of cuts was unfortunately probably going to be administrative layoffs. But thank goodness we weren’t in a situation where we had to do it, ”he said.
Barriers like the ones Gordon had to overcome have discouraged many black business owners from applying for P3 loans, said Amanda Ballantyne, executive director of the small business advocacy group Main Street Alliance.
“Black business owners were 50% more likely than white business owners to believe they would not be approved and were three times more likely than white business owners to ignore that the program even existed.” , she said.
A Main Street Alliance and Color of Change survey found that nearly half of small black-owned businesses have already closed or will close.
And even for those who have managed to stay open, the pandemic recession is likely to cause long-term damage, said Rashad Robinson, president of Color of Change, a racial justice nonprofit.
“They might be losing links with some of their customers, with the supply chain, maybe for materials or other things needed to keep the business going,” he said.
This damage to businesses, Robinson said, makes black communities more vulnerable to gentrification.
This article has been updated to include the names of the two groups that conducted the survey of black-owned businesses.