The U.S. Senate on Thursday voted to extend the application period for the Paycheck Protection Program until the end of May. Since the program began, over $700 billion have been distributed to small businesses to help cover losses during the pandemic. But minority-owned businesses have found accessing those funds harder. We talked to several Latino business owners and lenders about the issue.
The U.S. Senate voted today to extend the application period for the Paycheck Protection Program until the end of May.
Questions remain around how equitably the aid is distributed.
We talked to several Latino business owners and lenders about the pandemic's impact and the application process. It's part of our Race Matters series.
My name is Denise Hernandez. My husband and I work at our family-owned business. It's a catering company called True Flavors Catering.
Hi. I'm David Adame.
I'm Jose Martinez.
I'm president and CEO of Chicanos Por La Causa.
We're one of the largest community development corporations that we call ourselves in the country.
My name is Ilianna. And this is my mom, Gloria. And our family business is for kids clothes in Anaheim, California.
Considering that we were closed for three months, that's a long time. And no revenue, that's a long time. And it wasn't like the bills stopped or they froze. It's not like that.
We're in the events business, so in our business, we're — our business, there's gathering, right? So we were very quick to be affected by this.
We went dark for a while. We were the first affected. We were hit the hardest. It's going to be the longest industry to recover.
It's just my husband and I covering the hours, no employees. And we have been working like that since May until now. So, we work seven days out of the week.
When you're self-employed, you're in it. You do everything. Like, you wipe tables and you clean toilets, and you will fire — you will file reports or whatever it might be, right. Like, we do it all.
It's not like someone called the store saying, hey, the PPP application is out. Here's how you can apply for it. Let us know if you need help. They don't — no one does that. We don't have a whole finance department or a whole accounting department. Like, it's right here.
We have somebody that helps us with our accounting side, right, that we can easily pull up reports, and we can easily pull up financials at the push of a few buttons. And if you don't have that, it could be so stressful. It could be so tedious.
Many of these small businesses, they don't have significant relationships with banks. And they're expected to go to a bank and get one of these loans.
Just like the last recession, right, our communities were hit harder. They rebounded slower. So, this pandemic is no different. It just amplifies what we already see in our society.
When the very first PPP loan was announced, I was refreshing every hour for days, just waiting for Wells Fargo to release the application.
My parents have been banking with them through the business, thinking, OK, we have been longtime customers. They should be able to help us. They rejected our application. I remember watching Webinars from my local Small Business Administration. I was watching them every single day trying to get answers.
And, I mean, there were thousands of people on these Zoom calls from my local SBA, and they were all asking, like: We got rejected. What do we do?
There was no thought process about outreach, even marketing, for that matter, right? The marketing was, hey, we know you're struggling, and here it is. You go to your local bank and try to figure it out.
So, even with the banks, as large as a system it was, they got bogged down, right? And, of course, of the smaller businesses probably weren't going to get the biggest attention.
My team was working seven days a week, really trying to figure out how we can get as many PPP loans out there to our community. We helped a lot of restaurants. We helped a lot of janitorial services all the way down to individual Uber drivers.
It wasn't generating the revenue that we…
By no means..
By no means. It was just not even a fraction of what we're used to. But it allowed us to keep employees working.
That money ran out, right? And so, I would say October, maybe October, November, to when we were funded again in March, those months were super stressful. And so we were having to let people go.
We're just making the most of it and waiting to see if they give us something. But we're still there. And just like a lot of businesses there, you're just waiting to see what happens.
So good to hear directly from these Americans.
And we dig in now into more of the details with our congressional correspondent, Lisa Desjardins.
So, hello, Lisa.
Tell us, overall, where is the country right now with regard to the Paycheck Protection Program?
Let's go through some big numbers here.
This program, since it was started, Judy, has given out eight million loans. And since January, that is three million. Almost a third of the loans on this program have been this year. There is $80 billion remaining in funding and — or — I'm sorry — $80 million remaining in funding, and the thinking is that that should be enough to end the program. That is what sources on Capitol Hill tell me.
And, Lisa, we were just hearing these voices, of course, from people who have struggled to get the loans. Tell us about where we are with regard to disparity in handing out this money?
As we heard from those voices across the country, there is a wide spectrum of experience here.
But in general, we know this. Last year, the loans given out in PPP were disproportionate. In fact, twice of rate of loans for PPP were given out in white areas than were in areas that had more of a minority population.
Now, why is that? I think you heard some of this in the tape. Banks are a big factor. We know that banks have more relationships with white businesses. J.P. Morgan Chase had an analysis last year that found that, in fact, disproportionately, minority-run businesses do not have financing the way that white businesses do.
Also, minority-run businesses, we know in the case of the Hispanic Chamber of Commerce, they say they're smaller, an average of three to five people per business, sometimes just sole proprietors.
And, now, Congress realized this in December, made some changes to the PPP program that have gone into effect this year. And watchdogs I have talked to you think that this disparity actually has improved, that things are getting better.
One note, especially for sole proprietors, if you're a sole proprietor and you didn't feel like you could get PPP last year, the rules have changed, and you should try again.
And so, finally, Lisa, you have done a lot of reporting on this.
Tell us, where are — how are small businesses in this country doing right now?
Right. Let's look at these numbers.
This is from the National Federation of Independent Business, a survey of their members that came out just today. Look at this. They say 42 percent of those businesses are still struggling, meaning they're well below their levels from 2019.
But on the more positive side, more than a third are recovering, meaning they're almost back to normal or at normal revenue levels. And then this was what surprised me as well. There is a percentage, 23 percent, almost a quarter of their businesses say they're actually doing better than they were in 2019.
So, you see a situation where we still have the haves and have-nots, some businesses struggling, others not.
And I should say quickly it's $80 billion left in this program.
Really helpful to have this window into how these programs are going.
Lisa Desjardins, thank you very much.
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