“It was possible that some banks did do it, but most banks didn’t add that into the PPP loans,” said Dedrick Asante?Muhammad, Chief of Race at the National Community Reinvestment Coalition. “They were all scrambling to understand and collect.”
The Washington, D.C.-based nonprofit recently called the PPP data “mostly worthless.”
One example of what’s so profoundly wrong with our system comes through analyses of the PPP loan process. The National Community Reinvestment Coalition sent Black and white testers to banks to talk about securing PPP loans for their small businesses. The Black applicants were deliberately given sample profiles that were financially stronger than the white testers. Nonetheless 43% of the time, the white tester received preferential treatment.
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Redlined neighborhoods, which remain lower-income and more likely to have Black or Hispanic residents, consistently have far fewer trees and parks that help cool the air. They also have more paved surfaces, such as asphalt lots or nearby highways, that absorb and radiate heat.
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A study released last month by the National Community Reinvestment Coalition, a lending, housing and business group, found Black potential buyers faced considerable bias at banks where they applied for PPP loans.
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Between 2000 and 2013, more than 135,000 residents were displaced from their homes in 230 neighborhoods across the country, according to the National Community Reinvestment Coalition. The majority of these residents, NCRC says, were Black and Hispanic.
In Lancaster County, people of color are more likely to be denied a home loan, based on a 2019 National Community Reinvestment Coalition study of Lancaster County mortgage data.
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Consumer Action joined nearly three dozen consumer, civil rights, community, housing and privacy groups [including NCRC] in urging the Consumer Financial Protection Bureau (CFPB) to reconsider its decision to bury the narratives of consumer complaints, making it much harder for non-experts to find this essential material in its consumer complaint database.
A rushed rollout in April led to widespread media reports of overloaded systems, processing delays and confusion. Plus, some business owners—at least before certain criteria were relaxed—deemed it too tough to qualify for loan forgiveness in such an uncertain time. Still others weren’t even eligible or were discouraged by the lack of a banking relationship. Perhaps most disturbingly, some were dissuaded from applying because they were Black, an audit by the National Community Reinvestment Coalition showed.
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The National Community Reinvestment Coalition joined the St. Louis alliance in asking the FDIC to consider Edward Jones a St. Louis-based lender.
The bill is supported by: Asian American Association of America (AREAA); FHLBank of San Francisco; Mainstreet Alliance; National Association of Affordable Housing Lenders (NAAHL); National Association of Realtors (NAR); National Association of Real Estate Brokers (NAREB); National Business League; National Community Reinvestment Coalition (NCRC); National Fair Housing Alliance (NFHA), and National Housing Conference (NHC).
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“It’s interesting that COVID-19 hit at right around the similar time as when the United States of America, really was grappling with issues of racial inequality, ignited by other incidents but ignited by the George Floyd killing. And so we have this public health crisis that was shutting America down as the reality of racial inequality was kind of sparking consciousness raising all across the country,” concurred Dedrick Asante Muhammad, chief of Race, Wealth and Community for the National Community Reinvestment Coalition.
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A “mystery shopping” study by the National Community Reinvestment Coalition, a nonprofit in Washington, found that Black businesses with similar or slightly better financial profiles compared to White businesses, were offered different products and treated significantly worse than their White counterparts in 43% of the test encounters at branches of 17 banks.
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The National Community Reinvestment Coalition and researchers from Utah State, Brigham Young and Rutgers partnered to send testers to 32 bank branches representing 17 randomly selected financial institutions in the Washington, D.C. metro area. Researchers wanted to see how Black business owners might be treated in seeking pandemic-related relief.
Add to that a study from the National Community Reinvestment Coalition. It found 43% of the time, banks treated Black PPP borrowers significantly worse and offered different products when compared to White borrowers with slightly weaker financial information.
A 2019 study by the National Community Reinvestment Coalition provides a possible explanation: Researchers found banks treat Black applicants different from white applicants, encouraging white business owners to apply for one or more loans while discouraging Black business owners from applying for any.
