As Congress and the Whitehouse are approaching an agreement on new funding for the SBA Paycheck Protection forgivable loan program and other economic relief for small businesses – 89 Congressional leaders recommend an intentional inclusion of Minority businesses, many of whom were left out of the last round of funding.
In a letter to Treasury Secretary Munchin and SBA Administrator Carranza the Congressional Leaders made an important recommendation:
To ensure equitable access to this program, the U.S. Small Business Administration (SBA) must ensure that minority-owned businesses are not shut out of this program and require lenders to report on the demographics of any PPP lending. We also request that the SBA and Treasury amend guidance on PPP to reaffirm lending institutions’ obligation to comply with fair lending laws.
A point that was made in an earlier post was emphasized in the letter
The Paycheck Protection Program is a first-come, first-served program, leaving those without existing bank relationships or lines of business credit at a major disadvantage. 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 letter asks the SBA Administrator to implement fair lending laws and to ensure that the Interim Rule reflects those protections for minority businesses. They also recommend greater data transparency.
As mentioned in earlier posts – 3 things are needed for SBA loan programs to reach minority and other microbusinesses:
First, allocation of fund dollars for minority and other microbusinesses with less than 5 employees and annual revenue less than $150,000. This will ensure that money does not go to the quickest and those with the capacity to hire accountants and attorneys to submit the documentation needed.
Second, prioritize lenders that work with community development corporations who are actively serving minority and other micro businesses. These small businesses need support in filling out the application and after they get the loan, technical assistance to be successful in a tough new market.
Third, make the application process simpler and provide multilingual support.
To this I would add what these Congressional Leaders emphasize – enforce fair lending laws
Download the letter Congressional Letter here