Few minority business owners got Paycheck Protection Program loans, survey shows
While many small business owners across the country have complained of getting shut out of the Paycheck Protection Program, people of color appear to be having an especially hard time getting help. Only 12% of black and Hispanic business owners who applied for the forgivable low-interest loan under the federal initiative received it, according to a survey from racial equality groups Color of Change and UnidosUS. About two-thirds of the respondents said they were denied a loan or hadn't received a decision on their application.
The groups said they conducted the survey because the U.S. Small Business Administration, which oversees the PPP, isn't tracking demographic data on who is denied a loan. Color of Change President Rashad Robinson said the organization has heard anecdotally that minorities weren't getting loans and that the survey "backs up what so many of us already know."
"The Small Business Administration's Paycheck Protection Program is a driver of racial inequality, rather than a means to provide desperately needed relief for the small businesses at the heart of black and brown communities," Robinson said in a statement.
The PPP offers small businesses 1% loans that are forgiven on the condition that they keep workers on the payroll. Yet while the program is geared to employers with less than 500 workers, loopholes have also opened the door to borrowing by larger companies, such as hotel and restaurant chains with individual outlets that employ less than 500 people. At least 13 companies, including the owner of the Ruth's Chris Steak House chain, the Los Angeles Lakers basketball franchise and the Shake Shack hamburger empire, have announced they will refund millions in PPP money.
Like many U.S. companies, minority-owned small businesses have had to reduce store hours, lay off workers or cut wages since the pandemic struck. More than half of black and Hispanic small business owners said they would have to close within six months if customers don't return, according to the survey.
Andrea Powe, who owns an Atlanta video production company, applied for a $85,000 PPP loan so she could keep her 10 employees on the payroll for at least another two months. She furloughed the staff in mid-March after travel restrictions kept her from booking a photo shoot job in Africa.
Powe, 48, was initially confident of getting the loan because the program was pitched as offering help for mom-and-pop businesses. Powe, who is African-American, said she applied through SunTrust Bank and was told the first round of funding had run out.
"First I was told they weren't taking anymore applications," she said. "Then I heard they don't have any more money and that they have my application, and it'll be submitted as soon as more comes available."
Powe said her application was finally denied on Monday because of her poor credit history. "I was pissed because I'm looking at others get PPP loans like the Lakers and the Love & Hip-Hop guy who got $2 million and I'm wondering how are these people getting this money," Powe said. "I just feel like a lot of places that deem themselves major corporations got money and I'm upset about it."