A compilation of polls about the Paycheck Protection Program (PPP) shows that minority business owners and minority women find it particularly difficult to secure PPP loans.
Alignable.com, the largest online referral network for small businesses, has compiled data from several polls about PPP loans. The PPP is a program designed to ensure businesses retain employees even while struggling financially during the COVID-19 pandemic.
The program, facilitated and backed by the U.S. Small Business Administration (SBA), allows business owners to get loans in an amount of 2.5 times their average payroll costs from last year from local banks. These loans may be forgiven if a business uses the funds to meet certain thresholds — such as spending at least 75 percent of the money on payroll. Portions that are not “forgiven” must be paid back with a 1 percent interest rate.
More than 160,000 businesses participated in the polls compiled by Alignable, and the data shows “39 percent of small businesses still don’t have their loans and the entire loan process seems to be slowing down,” according to Chuck Casto, head of communications at Alignable.
The data shows 61 percent of small businesses have their PPP cash in hand, 6 percent were approved and are awaiting cash, 19 percent are awaiting approval, 8 percent were denied, and 6 percent tried to apply, but their banks were unable to process their applications.
For small businesses owned by minorities, 56.4 percent of applicants for PPP loans have been approved and 50.8 percent have received their funds. For women who are also minorities, 58.4 percent have been approved and 51.6 percent have received their funds.
According to Casto, all other businesses — not minority-owned — were approved at a rate of 76.6 percent, and 69.6 have received their funds. The data also shows that the longer a business has existed, the more likely it is to have been approved and received funds.
Casto also said smaller, “community banks” have been the “heroes” for small businesses applying for PPP loans, and have approved a higher percentage of PPP applications than larger banks.
“Looking at this story from the perspective of which banks offered small business loans when, it’s abundantly clear that community banks were the early heroes in the process and continue to be for those still seeking loans,” Casto said.