WASHINGTON, D.C. — This afternoon, the House Select Subcommittee on the Coronavirus Crisis released a new report revealing that the rushed launch of the Paycheck Protection Program (PPP) resulted in minority-owned businesses being shut out at the benefit of wealthy corporations. Prior to the program’s launch in April, banks raised concerns about the incomplete rules and application process that would ultimately favor existing customers and hurt businesses in communities of color looking to access loans in response to COVID-19.
Following the Small Business Administration’s limited release of PPP loan data, an analysis from Accountable.US found the 10 Congressional Districts with the highest percentage of Black residents received 35% less in PPP loan funds than the 10 CDs with the lowest percentage, a $21 billion gulf.
“We knew the PPP left people of color behind, but now we know it was by design. The Trump administration’s mismanagement and lack of transparency helped force tens of thousands of businesses to shut their doors for good, especially in communities of color,” said Kyle Herrig, president of Accountable.US. “As the COVID-19 crisis continues to disproportionally hurt marginalized communities, lawmakers must step in to replace the PPP with a new program that ensures resources make it to underserved populations across the country.”
KEY POINTS FROM THE REPORT:
- A Staff Report From The House Select Subcommittee On The Coronavirus Crisis Found That Early Rules For The Paycheck Protection Program Gave Existing Bank Customers “An Advantage In Accessing Aid,” With Some Bank Even “Limiting Their Initial Application Pool To Previous Customers.”
- The Subcommittee Found That “Several Lenders Processed The Largest Loans For Wealthy Customers Much More Quickly Than Smaller Loans.”
- In A March 28 Email, The American Bankers Association President And CEO Rob Nichols Told Members Of The Organizations Board That “‘Treasury Would Like For Banks To Go To Their Existing Customer Base As Lenders Will Have All Of The Businesses Information'” Which Would Allow For “‘Loans To Move Quickly.'”
- JPMorgan Chase “Processed Loans Above $5 Million Almost Four Times Faster Than Those Under $1 Million” While PNC And Truist “Processed The Largest Loans At About Twice The Speed Of The Smallest Ones.”
- The Subcommittee Found “Lenders Were Well Aware Of The Potential Fallout” And Cited An April 4 Citigroup Presentation In Which The Bank Said “‘A Policy Of Not Taking Non-Customers Might Create Heightened Risk Of Disparate Impact On Minority And Women-Owned Businesses.'”
Read Accountable.US’ analysis of the PPP’s failure to support Black-owned businesses here.