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Fed Chair Jerome Powell said yesterday that employment and economic activity continue to “strengthen.” But there’s still a lot of recovery to go, and financial ground to make up – for small businesses, especially, according to new analysis from Goldman Sachs and the Bipartisan Policy Center.
More than 11 million forgivable Paycheck Protection loans, totaling almost $799 billion, have gone out to businesses. But now the money’s running out.
Dane Stangler at the Bipartisan Policy Center said based on the latest Census survey of small businesses, “roughly half — they don’t see recovery to “normal” for another four to six months, and even more than six months.”
Stangler said Black- and Latinx-owned businesses are the most vulnerable to going under. Heading into the pandemic, they had less cash on hand.
“They had a harder time accessing credit, more likely to feel discouraged in seeking capital, and so less likely to even try,” Stangler said.
New businesses have been starting at a record pace. But Phillip Gaskin at the Kauffman Foundation says most owners use their own or family wealth to get started, which “disproportionately hurts people of color, women and those in rural areas.”
Gaskin and Stangler said we need new lenders and loan programs to keep struggling small businesses alive, and help create new ones to revitalize hard-hit communities.
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