Feds’ guidance hurt minority-owned businesses’ PPP chances, report says
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As the White House and Congress continue talks about a new relief bill, we’re learning more about how the last one played out — especially when it comes to the Paycheck Protection Program.
A new report from the House Select 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. That meant that some businesses, especially ones owned by women and minorities, were left out in the cold.
Back in April, J. Craig Gordon tried to apply through a bank for a PPP loan for the home health care company he runs in Savannah, Georgia.
“It wasn’t a situation where we could even get an application in,” he said.
He didn’t have a relationship with that bank. He tried applying through another bank. No luck there, either.
Gordon cut his own salary and put expansion plans on hold.
“The next layer of cuts unfortunately was gonna probably have to be some administrative layoffs. But thank goodness we weren’t in a situation where we had to do that,” he said.
Hurdles like the ones Gordon had to clear discouraged many Black business owners from applying for PPP 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 wouldn’t be approved and were three times more likely than white business owners to be unaware that the program even existed,” she said.
A Main Street Alliance and Color of Change poll found that almost half of Black-owned small businesses have either shut down already or will soon.
And even for those that managed to stay open, the pandemic recession is likely to do long-term damage, said Rashad Robinson, president of Color of Change, a racial justice nonprofit.
“They maybe lose connections with some of their customers, with the supply chain, maybe for materials or other things necessary to keep the business alive,” he said.
That damage to businesses, Robinson said, makes Black communities more susceptible to gentrification.
This piece has been updated to include the names of both groups that conducted the survey of Black-owned businesses.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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