Value Walk, September 15, 2021, Business Structure Of Small Businesses May Matter More Than We Knew
The removal of the credit score requirement for PPP loans may have revealed another barrier to credit: the structure of a business. Business structure was the first question asked on the PPP application. While it is unclear how lenders used this information, a survey of small business owners conducted by the National Community Reinvestment Coalition (NCRC) found a significant correlation with the responses and who inquired about or received a PPP loan.
The survey found significant differences in who received and inquired about PPP loans. Entrepreneurs with businesses structured as LLCs were significantly more likely to inquire about PPP loans than all other business structures, and those with an LLC, S or C corporation were significantly more likely to receive PPP loans than those with a sole or joint proprietorship or a partnership business structure.
