New SBA Data Release Highlights the Inequalities in Distribution of Federal Relief Funds for Small Businesses

For Immediate Release: 
Wednesday, December 2, 2020

Small Business Majority CEO and Founder John Arensmeyer comments on the U.S. Small Business Administration’s data release on Paycheck Protection Program borrowers and what is needed to ensure small businesses can survive in the midst of the pandemic. 

“The release of the U.S. Small Business Administration’s (SBA) data on Paycheck Protection Program (PPP) borrowers shows us what we already know to be true: Larger businesses benefited significantly from funds meant to be a lifeline for our small business community. We are disappointed, but not surprised, to learn that the majority of PPP funds went to only 5% of borrowers. This points to how the program is fundamentally flawed as it favored larger and more well-established businesses that have existing banking relationships. 

Additionally, the new data continues to shed light on the structural inequalities in our economy, particularly when it comes to accessing capital. We know from our research that small businesses owned by people of color were less likely to have received a PPP loan and that Black entrepreneurs in particular were more likely to be underfunded by PPP. The release of this data also exposes a faulty system that suffered from fraud and abuse. Both factors are harmful to the survival of small businesses, particularly those owned by women and people of color who did not receive an equitable distribution of federal dollars.  

A new round of PPP funding must prioritize small businesses that were pushed to the back of the line, or completely shut out, during the rollout of the federal program—most notably self-employed individuals or sole proprietors, microbusinesses and small businesses owned by people of color, women and immigrants. Any new PPP funding must happen swiftly and efficiently while addressing issues of fraud and abuse, and it must also include automatic forgiveness for new and existing loans under $150,000—something our research shows is of particular concern to small businesses. 

Lastly, this data underscores that the small business community needs additional relief beyond a temporary PPP fix. Federal lawmakers must adopt a plan that addresses long-term recovery, including direct grant assistance for small businesses hardest hit by the pandemic.”

About Small Business Majority

Small Business Majority is a national small business organization that empowers America's diverse entrepreneurs to build a thriving and inclusive economy. We engage our network of more than 70,000 small businesses and 1,000 business and community organizations to advocate for public policy solutions and deliver resources to entrepreneurs that promote equitable small business growth. Our deep connections with the small business community along with our scientific research enable us to educate the public about key issues impacting America’s entrepreneurs, with a special focus on advancing the smallest businesses and those facing systemic inequalities. Learn more about us on our website and follow us on TwitterFacebook and Instagram.

Press State: 
National