PPP Has Turned Into O.P.P. For Black Businesses
By Namon Freeman
- Only 2% of Black-owned businesses received PPP government loans
- More than 40% of Black small business owners were forced to close up shop as a result of the pandemic
Only 2% of Black-owned businesses received Paycheck Protection Program (PPP) loans as part of the CARES Act, that’s funded 4.9 million in loans totaling more than $521 billion. It has been revealed that over half a million small businesses that received funds retained no jobs, yet there are claims that much of the reporting on the usage of funds is incorrect. More concerning, the amount of untapped funds could confirm the assumption that rural or minority-owned businesses with fewer traditional banking relationships are finding the relief funds less accessible.
Why This Matters: Enterprises in “economically distressed” areas have only received 23% of the loan funds. More than 40% of Black small business owners were forced to close up shop as a result of the pandemic. Research by JPMorgan Chase found that Black businesses were already strapped for cash before the pandemic and some have suffered disproportionately since. Although the average disbursement was $107,000, many larger and public companies initially took advantage of the ambiguous language to get approval, only to later refuse funds after public scrutiny.
Enterprises in “economically distressed” areas have only received 23% of the loan funds
The main critique is the lack of program oversight stemming from an over reliance on private banks for administration. With about $132 billion in funding remaining, Democrats have been requesting more transparency.
Situational Awareness: In response to claims many communities lack access to current loan administrators, Congress replenished the fund with $60 billion dollars in April. With hope and votes, perhaps forthcoming relief will more accurately direct relief to the businesses and communities that need it most.
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