WASHINGTON, D.C. – The U.S. Senate passed a deal today to replenish funding for the Paycheck Protection Plan (PPP), the loan program designed to help small businesses slammed by the coronavirus crisis. Lawmakers agreed to send an additional $310 billion to the PPP, which ran out of its initial funding capacity last week. Like the initial PPP funding, most of these new funds will continue to go to larger, wealthier and less diverse businesses leaving smaller businesses of color excluded from the program unless changes are made.
Center for Responsible Lending Federal Advocacy Director and Senior Counsel Ashley Harrington made the following statement:
Businesses of color employ more than 8.7 million Americans and generate more than $1.38 trillion dollars to the overall economy. The Senate is exacting damage on whole communities, states, and regions when these businesses cannot access the Small Business Administration’s PPP funds to keep their doors open and maintain their employees. Businesses of color were locked out of round one of the SBA PPP, and the Senate’s new proposal fails to provide that they will have fair access to the new $310 billion.
This bill distributes most of the funding again to large banks that prioritized wealthier businesses over small businesses. It appropriately includes set-asides for community banks; they reach rural areas and additional businesses, but they have had even less success in serving borrowers of color. The proposal fails to provide separately reserved funding for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), as they have the strongest track record of serving borrowers of color and are least likely to be able to access PPP funding under its current structure. This bill also does not take basic steps to ensure equity and transparency as it does not require data on borrower demographics and loan amounts to be collected or reported.
We call on the SBA to implement the law in a way that ensures equitable access to this program so that all communities are able to weather this storm. The SBA must specifically allocate resources for CDFIs and MDIs and require robust data collection from all participating lenders. Wealthy companies already got more than their fair share of the PPP, now it’s time for small businesses owned by Blacks, Latinos, Asian Americans and Pacific Islanders, and Native Americans to have the access they have been denied.
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Press Contact: ricardo.quinto@responsiblelending.org