Did Paycheck Protection Program Loans Reach More Minority Businesses in 2021?
Elizabeth and Antonio Wellington credit $20,833 Paycheck Protection Program loan to help keep their Elmont trucking business during the pandemic.
Wellie The Transporter LLC secured the PPP loan last year from Customers Bank in West Reading, Pennsylvania. The loan was canceled in December because a majority of the funds went to pay employee salaries.
The minority-owned business, with a staff of three, received help from the federal government’s flagship COVID-19 relief program as part of a 2021 push by Congress and the White House to get more loans in the hands of the smallest businesses, those owned by women. , veterans or members of minority groups and those located in poor neighborhoods. Politicians were responding to criticism from banks and other private lenders to focus on lending to big business and listed companies in 2020, the first year of the PPP.
Local groups that represent minority entrepreneurs are split on whether the push has been effective in helping businesses in their communities survive the pandemic.
Minority business owners got funding this time around and it helped them stay afloat.
-Elizabeth Wellington, Vice President of Wellie The Transporter and Officer of the African American Chamber of Long Island
“There was a big difference in 2021 compared to 2020,” said Elizabeth Wellington, vice president of Wellie The Transporter and leader of the Long Island African American Chamber of Commerce. “Minority business owners got funding this time around and it helped them stay afloat, it made a difference to the community.
She said the The 300-member chamber helped 220 businesses apply for PPP loans last year by hosting educational webinars and building a relationship with Customers Bank. She said “significantly more” black-owned businesses in Nassau and Suffolk counties got loans in 2021 than in 2020.
That’s not the case among Hispanic-owned businesses, according to Luis Vazquez, president of the Long Island Hispanic Chamber of Commerce, which has 300 members.
‘A few of my members got [the loans] but many of them were afraid.
–Luis Vazquez, president of the Long Island Hispanic Chamber of Commerce (Photo credit: Newsday/J. Conrad Williams Jr.)
“I haven’t seen a big difference… A few of my members have [the loans] but many of them were scared because they didn’t have all the documentation and the process [of applying] was quite difficult,” he said.
Data on the number of PPP loans issued to minorities, women and veterans is not available because lenders were not required to collect demographic information about borrowers.
But data shows that far more loans were made in 2021 than in 2020 to businesses and nonprofits located in majority-minority communities on Long Island.
For example, 460 PPP loans were granted to Central Islip in 2021 compared to 292 in 2020; 1,312 loans to Elmont vs. 512; 479 loans to Roosevelt compared to 124 and 257 loans to Wyandanch compared to 98.
In 9 out of 10 communities where at least 80% of the population are members of minority groups, significantly more loans were granted last year than in 2020.
In addition, more PPP loans were below $150,000 compared to 2020, a sign that small businesses were getting more help, according to a Newsday analysis of SBA data obtained under the Freedom of Information Act.
Asked about the impact of PPP on minority and women-owned businesses over the two-year period, SBA Administrator Isabella Casillas Guzman told Newsday, “96% of PPP in 2021 went to smaller companies with 20 employees or less – this is where we have over-indexing [high representation] women and people in businesses of color.
The disparate treatment of white and minority borrowers by bank employees was a problem in 2020.
A survey conducted from April 27 to May 29, 2020 of 17 lenders in the Washington, D.C. area found that white applicants for PPP loans were treated better than black applicants 43% of the time, according to the National Community Reinvestment Coalition.
Using black and white matched testers with equivalent qualifications, the advocacy group found that white customers were more often told they would be eligible for a loan, and no black women were told they would be eligible.
“I feel like we did better in the 2021 round because we knew what to do.”
-Zeshan Hamid, owner of Shaheen Caterers & Event Planners and president of the South Asian Chamber of Commerce in New York (Photo credit: Jeff Bachner)
On Long Island, South Asian business owners felt more comfortable applying for PPP loans last year than in 2020 because they knew more about the program and lawyers, accountants and other experts have volunteered to help with the paperwork, said Zeshan Hamid, president of the New York South Asian Chamber of Commerce.
“I feel like we did better around 2021 because we knew what to do,” said Hamid, who founded the 200-member chamber four years ago on the island and recently made it extended to the whole state. “In the 2020 cycle, by the time companies discovered this opportunity, it was gone” because federal loan guarantees had run out, he said.
Hamid said his catering business, Shaheen Caterers & Event Planners, was ineligible for a PPP loan because it has no full-time employees. But Shaheen Restaurant, of which Hamid is a partner, secured two PPP loans which preserved five full-time positions. Both companies are in Hicksville.
Hamid said: “You would have lost many more jobs without these loans.”