Loan ends Monday for third round of PPP, which aims to correct inequalities
Photo by Claire Trageser
Monday is the last day for small business owners to apply for a Federal Paycheck Protection Program, or PPP, loan, as part of a third round of loans intended to give businesses a better chance of raising funds. businesses owned by people of color and small, low-income businesses. neighborhoods.
Business owners who wish to apply for a loan should not do so through the government itself, but through banks and other lenders. The third round of loans favored community financial institutions, which were supposed to better target small businesses and minority-owned businesses.
The first two rounds of loans were made primarily through banks, which in part resulted in inequality in how the money was distributed, as businesses in low-income neighborhoods are less likely to have a existing relationship with a bank.
In the first two rounds of P3 loans, San Diego County lenders made 61% of loans to businesses in majority white census tracts and just under 12% to businesses in Latinx majority census tracts, according to Federal loan and business data provided by nonprofit journalism Reveal’s Reporting Networks. In census tracts of Imperial Beach, Skyline, San Ysidro, Nestor and Paradise Hills, less than 5% of eligible businesses received loans, while in census tracts of Carlsbad, Poway, Torrey Highlands and Encinitas, 96% 99% of eligible businesses received PPP loans, according to Reveal data.
RELATED: Businesses in Majority of White San Diego Communities Receive the Most P3 Loans By Far
In an attempt to correct inequalities across the country, the Biden administration made changes to the third round of PPP loans, including providing for a two-week period in which only companies with less than 20 employees could apply, allowing sole proprietorships to obtain larger loans. , and let people with both non-fraudulent felony convictions and student loan delinquencies apply.
âWe recognized that there were challenges for socially underserved markets to access dollars,â said Mike Sovacool, deputy district manager for the SBA San Diego office. “So to meet that need, the SBA instituted some of these programs.”
Local business owner Charlie Johnson aimed to take advantage of these changes in the third round of PPP. He owns Makello, which helps customers do energy analyzes on their homes.
When the third round of PPP loans was made available in January, Johnson, who is black, “scrambled to find banks that were there and able to support minority and small businesses,” he said. -he declares.
But when he contacted many banks, their websites weren’t set up to apply for PPP loans, or he got no response from them.
âThat week I spent 40 hours digging in,â Johnson said.
He then contacted Community Development Financial Institutions, which are private lenders dedicated specifically to giving money to low-income, minority-owned business owners. This included CDC Small Business Finance, a San Diego-based lender.
âIn six weeks we had funding,â Johnson said.
The third round of PPP loans totaled $ 800 billion, and as of last week most had already been granted. The companies that receive the loans will not have to repay them, as long as they meet certain criteria, such as employee and compensation levels are maintained and at least 60% of the funds are spent on salary costs.
San Diego News; when you want it, where you want it. Get local stories on politics, education, health, the environment, the border, and more. New episodes are ready on weekday mornings. Hosted by Anica Colbert and produced by KPBS, San Diego and Imperial County Station NPR and PBS.
To view PDF documents, download Acrobat Reader.