2021 saw an increase in PPP funding for minority-owned businesses. But there is still room for improvement
Business owners of color have received much more urgency Paycheque Protection Program funding in 2021 compared to 2020, when only 12% of color applicants received what they asked for, and up to 95% of black-owned businesses in all fields were effectively excluded because they didn’t were not non-employer companies.
The second round of PPP, launched in January 2021, contained changes to make aid available to minority-owned businesses. For example, the first loans went through community banks more likely to have relationships with business owners of color, and they opened eligibility to small businesses, unemployed businesses, and entrepreneurs. Some banks, like M&T, accepted applications from business owners who had never done business with them before, which removed a major hurdle for businesses that did not have a bank loan for their business.
Small Business Platform Womply, which claims to have facilitated 27% of all minority loans in 2021, including 981 PPP loans for minority-owned businesses in Delaware, released a report on the impact of PPPs on minority-owned businesses that shows a marked increase in 2021.
The “minority,” in the report’s data, includes Blacks, Hispanics and Latin Americans, Native North American / Alaska Native, and Native Hawaiian / Pacific Islander.
While the data improved a lot for minority-owned businesses between the first and second rounds, with minority access doubling in four months from January to April 2021, the initial numbers were so low that the doubling still leaves many businesses without funding needed. As part of its process, Womply identified 2,364 minority-owned businesses in Delaware that are still in need of P3s.
This aligns with Womply’s nationwide finding that for every PPP loan given to a minority-owned business, two of those businesses need it but are turned down.
The report concluded that an additional $ 50 million in PPP loans would be needed to fund all eligible businesses, including 1.2 million minority-owned businesses.