the balance: $134 Bln Goes Untapped After PPP Deters Small Businesses

the balance, August 14, 2020: $134 Bln Goes Untapped After PPP Deters Small Businesses

Even with more than 16 million people still out of work, and stores and restaurants shuttering across the country because of the COVID-19 pandemic, the federal government’s loan relief program for small businesses expired with $134 billion untapped.

Despite extending the application deadline from June 30 to Aug. 8, the Paycheck Protection Program didn’t wind up using nearly all the funds allocated by Congress. About $525 billion of the $659 billion appropriated was actually loaned out, according to data provided by the U.S. Small Business Administration, which operated the program. In fact, in the additional 5 ½ weeks, total approved loans grew by just $3.5 billion.

While the SBA says the untapped funds show the program worked, small business advocates and advisors say the PPP’s flawed design, chaotic start, and changing rules were deterrents for many potential applicants. Studies by the Brookings Institution and Federal Reserve Bank of New York indicate loans didn’t always go to the areas with the most need.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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