COVID Relief Loans Loans Flowed Mostly To Businesses In Wealthy White Communities

Businesses in upper-income mostly White neighborhoods dominated the government’s Payment Protection Program (PPP), according to the analysis of government data by the National Community Reinvestment Coalition (NCRC). The findings confirms evidence that business owners of color and businesses in lower-income communities faced many obstacles that cut them off from the government’s COVID relief program for small businesses.

The NCRC analysis was based on records of 5 million PPP loans released by the U.S. Small Business Administration. The data was only made available after a federal judge ordered the data released after several news organizations sued the agency under the Freedom of Information Act (FOIA).

After adjusting for total businesses in each neighborhood, NCRC found that, on average, neighborhoods in low-income areas received less than a quarter as many PPP loans (.387 loans per census tract in low-income tracts, compared to 1.787 loans per census tract in upper-income census tracts), and only about one-third of the PPP loan amount ($36,481 per business in low- and $100,539 in upper-income census tracts). Also, the analysis evidenced that neighborhoods with higher percentages of people of color got significantly fewer loans and lower amounts.

The NCRC study is more evidence that Fair Lending laws must be better enforced.

Read the December 11, 2020 NCRC release.

To read more on NCRC’s preliminary analysis, visit: NCRC Paycheck Protection Plan Preliminary Analysis.

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Source: NCRC, December 11, 2020.