![]() That also meant more money for Black-owned businesses, since they are more likely to be sole proprietors and have relationships with non-traditional banks, according to Andrew Fitzgerald, vice president of the Baton Rouge Area Chamber. In the case of self-employed people, their share of loans grew from 9% in the program’s first phase to 86% in 2021, according to the Government Accountability Office. That’s in line with their increase nationally.Īcross the US, those CDFIs, plus fintech lenders, helped get PPP loans to businesses with fewer employees. ![]() In 2020, CDFIs originated 16% of all PPP loans in the city and its metro area, with their share rising to nearly 40% in the program’s later phase. The data from Baton Rouge exemplifies this shift. They included smaller ones such as community development financial institutions (CDFIs), whose mission is to serve lower-income communities, as well as online “fintech” lenders.īy early 2021, loan data from the program’s second phase showed “a step in the right direction for our agency-wide mission to support the smallest of small businesses-mom-and-pop, women-and minority-owned businesses,” said Patrick Kelley, associate administrator for SBA. Kanye West and football player Tom Brady notoriously got relief aid, as did fast food chain Shake Shack, which returned its loan after a public outcry.īy PPP’s later phase in 2021, dozens of new lenders joined the program. It later emerged that some recipients of those initial loans weren’t exactly among the most needy. The ripple effect was that the distribution of these loans was skewed, with many smaller businesses shut out of the first tranche of loans in April 2020, which was depleted within two weeks. In order to deploy funds as fast as possible, the US enrolled big banks to distribute the loans, citing the pre-existing relationships banks had with businesses across the country. In its first year, PPP lending faced a considerable amount of backlash. The original 2020 loan came with a major obligation attached: Burn through the money in eight weeks. Because of the greater flexibility in how to spend the money, Metzler was able to put some of it away, and pay off remaining debt. “Round two of PPP was truly a savior,” he said. ![]() “It helped me to not fall behind” in the pandemic’s early stages, he said.īut it’s a second loan of a similar amount that Metzler managed to secure in 2021 that made the biggest impact. Photographer: Bryan Tarnowski/BloombergĪfter Congress passed the CARES Act in March 2020 to provide a range of relief aid to businesses and individuals, Metzler was able to secure a $100,000 forgivable, low-interest and uncollateralized PPP loan, money he used to pay staff and catch up on rent. Owners Greg Metzler and Nathan Matticks have received two PPP loans to help them get through the pandemic. ![]() Greg Metzler, owner of Lux Salon, cuts a customer’s hair on Aug. Data about the program also provides unprecedented insight into small business lending, particularly into racial demographic data not previously collected on a large scale. In total, businesses have received 11.5 million loans through the $800 billion aid program, which is one of the biggest in US history. ![]() In communities across the country, these changes resulted in smaller-sized loans going to a much larger number of smaller businesses, many of whom didn’t have established ties to the big banks that dominated the early part of PPP. The SBA also kicked off its later round of lending in 2021 by prioritizing applications from businesses with fewer than 20 employees during the first two weeks. So, what changed? By 2021, the Small Business Administration, the program’s administrator, had admitted about 600 new lenders, including small community banks that serve minorities, and allowed more sole proprietors and self-employed people to participate. Sources: Bloomberg News analysis of Small Business Administration data, Census Bureau 2016-2020 5-Year American Community Survey ![]()
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