Members of Congress are pressing the Department of Treasury and the Small Business Administration to disclose statistics for how many small, women-owned and minority-owned businesses received paycheck protection loans as part of the federal government’s response to the COVID-19 pandemic.
The CARES Act set aside $659 billion in low interest loans for small businesses that met payroll requirements during the early months of the pandemic. But as state and local governments give the green light for most small businesses to open back up, the question has become, how many minority-owned businesses received help from PPP?
The answer, so far, is that we don’t know.
Some members of Congress, including U.S. Rep. Jim Cooper, D-Nashville, are seeking to change that. Cooper has co-signed at least two letters to Treasury and the SBA encouraging more transparency. And he’s co-sponsored a bill that would require the SBA to disclose the same demographic data on PPP loans that it already does on its bread-and-butter 7(A) loans.
“The SBA should immediately act to require the collection of demographic data on the PPP loan forgiveness application as well as in all new PPP loan applications,” U.S. Rep. Jennifer Wexton, D-Virginia, wrote in a June 17 letter co-signed by Cooper. “This demographic information should also be disclosed along with the other PPP loan information to inform congressional oversight efforts to determine the effectiveness of the program in addressing the needs of these historically disadvantaged small businesses.”
Amid the push from Congress, Treasury Secretary Steve Mnuchin tweeted on June 15 that he will be having bipartisan discussions with the Senate Small Business Committee and others to “strike the appropriate balance for property oversight of (PPP loans) and appropriate protection of small business information.” Mnuchin has worried that increasing transparency of the loan program should not come at the expense of disclosing proprietary information about the businesses that participated in PPP.
People of color are less likely to be approved for a loan, and when they are approved, it is often for smaller amounts with higher interest rates than those offered to similarly situated white borrowers. – April 15 letter to the Small Business Administration
But, Congress members have pushed back on those concerns, pointing out that the SBA already releases demographic data for its 7(A) loan program.
When PPP was in its infancy in April, Cooper co-signed a letter outlining concerns that minority-owned businesses were missing out on the loans. The CARES Act created PPP loans on a first-come, first-serve basis. But the loan application also required existing banking relationships, making it harder for some businesses to quickly access the funds.
“People of color are less likely to be approved for a loan, and when they are approved, it is often for smaller amounts with higher interest rates than those offered to similarly situated white borrowers,” the April 15 letter from members of Congress to the administrator of the SBA program and Mnuchin said. “To that end, we urge you to work with lenders to ensure fair access and require lenders to report on PPP lending to minority-owned businesses relative to their overall lending through the program. This data must include information on loan applicants and outcomes, disaggregated along racial and ethnic lines.”
Instead of waiting on Mnunchin to roll out new transparency measures, a bill has already been filed in the House by U.S. Rep. Katie Porter, D-California, that would effectively require the same disclosure requirements of the PPP loans as the 7(A) loans. Cooper co-sponsored that bill.
As concerns arose that minority-owned businesses were missing out on federal loans, state Rep. Harold Love, D-Nashville, worked to ensure that similar problems didn’t emerge at the state level. Love, who serves on Gov. Bill Lee’s recovery Stimulus Financial Accountability Group, said the state needs to make sure that its stimulus efforts don’t have similar barriers to access.
To that end, Love said he was pleased that there were no strings attached to the $200 million in grants Lee’s recovery group is offering to small businesses that were forced to shut down because of the pandemic.
Businesses that closed due to an order by the governor and grossed less than $500,000 last year will receive the grants. That means minority-owned businesses have equal access to the program.
“The good thing about the grants is that there’s no application requirement,” Love said. “Every business registered with (the Department of Revenue) will automatically get one. I will continue to push to ensure that our small businesses as well as women-owned and minority-owned businesses have equal access to whatever assistance the (economic recovery group) offers.”
The PPP loans are administered through the SBA in partnership with local banks, but not all banks chose to offer the loans. Citizens Bank, the first minority-owned bank in Tennessee and one of the primary banks for black-owned businesses in Middle Tennessee, did not participate in the PPP loans and instead chose to help its clients through other measures, a bank spokesman told the Tennessee Lookout.