The Hill: White Paycheck Protection Program borrowers were treated better than Black borrowers in two cities

The Hill, November 13, White Paycheck Protection Program borrowers were treated better than Black borrowers in two cities

Back in July, a nonprofit sent Black and white borrowers with similar credit and assets to banks in the Washington, D.C., area to secure Paycheck Protection Program (PPP) loans, which the Small Business Administration has offered to forgive if all businesses use the money to keep their employees on the payroll. Then, they tried it again — this time in the Los Angeles metropolitan area.

The results revealed what Black, Indigenous and Americans of color know from personal experience: White people — especially white men — are treated better.

“The tests show that old patterns of systemic discrimination in lending didn’t magically disappear when banks made PPP loans,” Jesse Van Tol, CEO of the National Community Reinvestment Coalition, said in a statement after the initial results were published. “Banks still have a long way to go to root out discrimination, and clearly they need better training for their employees and more testing to create internal checks and internal pressure to drive out racist practices.”

Out of 60 tests with 47 different financial institutions from July 27 to Aug. 7, the last two weeks that federal Paycheck Protection Program (PPP) loans were available to businesses affected by the coronavirus pandemic, white testers were favored over either or both Black and Hispanic testers 35 percent of the time, the study concluded. Women were more likely to be treated differently based on race or national origin than men, according to the study, with Black women treated significantly worse than both white and Hispanic women.

“Women-owned businesses are vital to the sustenance of a strong and growing economy,” said the authors of the study, which included Anneliese Lederer, Director of Fair Lending and Consumer Protections, and Sara Oros, Program Coordinator of Fair Lending and Fair Housing.

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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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