Survey finds disparities in PPP loan access for Philly businesses
Add Axios as your preferred source to
see more of our stories on Google.
Small businesses owned by people of color in the Philly metro were less likely than white firms to get the full loan amount they requested from the Paycheck Protection Program last year, according to a new report.
Why it matters: The Federal Reserve Bank of Philadelphia's recent survey found disparities in access to PPP funding, which aimed to serve as a lifeline to businesses during pandemic shutdowns.
State of play: The survey, conducted between September and October 2020, found that 54% of small businesses owned by people of color received all of the PPP funding they requested, compared to 74% of white-owned businesses.
- Many business owners of color surveyed shared that they lack relationships with banks and lending institutions.
- Firms owned by women and people of color were also more likely to report revenue losses compared to white and men-owned firms.
- One in 10 women-owned businesses in the Philly metro didn't get any money during the first two rounds of funding, the highest rate of any demographic.
Of note: The data only reflects the first two rounds of PPP loans. Regional 2021 information isn't available yet.
- The data also doesn't break down people of color by race.
The big picture: Black-owned businesses that applied for PPP loans received substantially lower amounts compared to similar white-owned businesses between April and August 2020, a national study released earlier this year suggests.
- Neighborhoods with high Latino populations in places like Los Angeles, New York, Phoenix and San Diego got half as many loans as white ones by mid-2020.
- Asian-owned small businesses saw the biggest decline nationally in working business owners through the end of 2020.
Yes, but: President Joe Biden's administration expanded eligibility last February and put money aside for small businesses to address disparities.
- By June 2021, the federal Government Accountability Office said "lending in traditionally underserved counties was proportional to their representation in the overall small business community."
What they're saying: Shani Newton, a Black business owner of Dolly's Boutique in the Mt. Airy neighborhood, was forced to close a second location and lay off all seven of her employees during the pandemic.
- She received a little less than half of what she requested through the PPP program. Her loan helped cover bills and bring back some of her employees.
- "We're surviving and it's not easy," she said. "We're working a lot harder with less because we're short-staffed."
Ashley Putnam, a director at the Federal Reserve Bank of Philadelphia, said minority chambers of commerce and other community organizations are "doing the important technical assistance work with small businesses" when it comes to loan applications.
- "We need to make sure those organizations are able to continue to support those business owners."