Small businesses owned by people of color in the Philly subway were less likely than white businesses to get the full loan amount they requested from the paycheck protection program last year, according to a new one. report.
Why is this important: The recent investigation by the Federal Reserve Bank of Philadelphia revealed disparities in access to PPP financing, which was intended to act as a lifeline for businesses during pandemic shutdowns.
Inventory: The survey, conducted between September and October 2020, found that 54% of small businesses owned by people of color received all the PPP funding they requested, compared to 74% of white-owned businesses.
- Many business owners of color interviewed said they lacked relationships with banks and lending institutions.
- Businesses owned by women and people of color were also more likely to report lost revenue compared to businesses owned by whites and men.
- One in 10 women-owned businesses in the Philly metro did not receive money in the first two rounds of funding, the highest rate of any demographic.
To note : The data only reflects the first two rounds of PPP loans. Regional information for 2021 is not yet available.
- The data also does not break down people of color by race.
The big picture: Black-owned businesses that applied for PPP loans received significantly lower amounts than similar white-owned businesses between April and August 2020, suggests a national study released earlier this year.
Yes, but: President Joe Biden’s administration expanded eligibility last February and set money aside for small businesses to address the disparities.
What they say : Shani Newton, owner of a black business at Dolly’s Boutique in the Mt. Airy neighborhood, has been forced to close a second location and lay off her seven employees during the pandemic.
- She received just under half of what she requested under the PPP program. His loan has helped cover bills and bring some of his employees back.
- “We are surviving and it is not easy,” she said. “We work a lot more with less because we are understaffed.”
Ashley Putnam, director of the Federal Reserve Bank of Philadelphia, said minority chambers of commerce and other community organizations “do important technical assistance work with small businesses” with respect to loan applications.
- “We need to make sure that these organizations are able to continue to support these business owners.”