“As the Treasury Secretary, you must use your authority to ensure that the structural issues with the PPP do not continue to exclude businesses of color.”
A coalition of civil rights, faith, and community development organizations sent a letter to U.S. Secretary of the Treasury Steven Mnuchin urging him to set-aside $10 billion out of the $310 billion in replenished Small Business Administration (SBA) Paycheck Protection Program (PPP) funds for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs). The coalition also seeks that at least 50% of all the new loan dollars are reserved for small business owners, as the most disadvantaged businesses only have a single employee–the business owner.
CDFIs and MDIs have the strongest track record of serving borrowers of color and are least likely to be able to access PPP funding under its current structure. The SBA will resume accepting PPP applications from participating lenders on Monday, April 27, 2020 at 10:30 a.m. ET.
“Businesses of color are a substantial source of income and employment in communities of color—accounting for 8.7 million jobs at total annual payroll of $280 billion, and $1.3 trillion in revenue—yet they were almost entirely excluded from the first round of funding in the PPP,” wrote the group. “CDFIs and MDIs have strong track records of lending to underserved businesses as they best understand the needs of small businesses of color and have systems to adequately process loans to them. However, without a specific allocation, the expanded PPP funding will run out before CDFIs and MDIs can access it, thwarting Congressional intent and the overall goals of the program. … As the Treasury Secretary, you must use your authority to ensure that the structural issues with the PPP do not continue to exclude businesses of color. Because structural issues remain with the new SBA PPP, businesses of color will fail to get their fair share unless dedicated funding is provided for CDFIs and MDIs.”
Additionally, the group urged Secretary Mnuchin to implement and require a robust data collection process for all lenders. The group stressed that transparency is essential to the PPP program and that data shows the public which businesses are being served with public dollars. Reports have estimated that more than 90% of the original $349 billion, which was initially appropriated in the CARES Act, went to wealthier and non-diverse businesses.
The following is a list of organizations who signed the letter to Secretary Mnuchin:
NALCAB – National Association for Latino Community Asset Builders
Natural Capital Investment Fund
National Community Investment Fund
National Urban League
National Baptist Convention USA, Inc.
Opportunity Finance Network
Page 30 Coalition
Partners for Common Good
U.S. Black Chambers
Your Resource for Funding Insights
Paycheck Protection Program (PPP)
April 28th Update: Democrats have started a list of priorities for the next Coronavirus relief bill. Among others, they are seeking more assistance for state and local governments, food assistance, and funding for vote-by-mail.
In contrast, Senate Republicans are advocating the inclusion of language to help shield businesses from lawsuits as states begin to reopen their economies.
Yesterday, the Small Business Administration (SBA) faced technical challenges as the Agency began accepting loan applications for the Paycheck Protection Program (PPP).
It is reported that by 3:30 p.m. yesterday, the SBA processed 100,000 loans submitted by 4,000 lenders. However, the Department did not say how much of the $310 billion had been allocated through those loans.
Amid the replenishment of PPP and EDIL, Senate Small Business and Entrepreneurship Chairman, Marco Rubio (R-FL) sent a letter to the SBA and Department of Treasury urging regulators to issue immediate guidance for the participation of CDFIs and minority depository institutions. The guidance requests include:
Setting aside $2 billion of the $30 billion set-aside for CDFIs and minority depository institutions;
Prioritizing the approval of CDFI and minority depository institutions as eligible lenders;
Reducing the prior lending volume requirement for these institutions;
Establishing safe harbors for these institutions in relation to compliance with the Bank Secrecy Act; and,
Outlining parameters for secondary market sales, and facilitating the sale of PPP loans to provide these institutions with the ability to recapitalize and continue making loans to small businesses, including the eligibility of such institutions to access liquidity through the Federal Reserve’s PPP Lending Facility.