CBS: Up to 90% of minority and women owners shut out of Paycheck Protection Program, experts fear

[Ana]

Flaws in the Paycheck Protection Program are hindering small businesses owned by minorities and by women from securing federal coronavirus relief, according to lending experts and interviews with numerous owners.

Many diverse business owners applied for loans through the Small Business Administration program, only to come up empty because they either didn't qualify or the funds had been exhausted by the time their applications were processed.

"Based on how the program is structured, we estimate that upwards of 90% of businesses owned by people of color have been, or will likely be, shut out of the Paycheck Protection Program," said Ashley Harrington, director of federal advocacy and senior council for the Center for Responsible Lending, a non-profit group that combats abusive lending practices and recently examined the loan program's parameters.

One obstacle for minority business owners is that many banks participating in the low-interest, forgivable loan program are only issuing loans to existing clients to speed up the approval process that grants access to the money.

Businesses owned by people of color are less likely to have commercial banking relationships, Harrington said.

"[If] participating banks are requiring that applicants have a credit relationship — to already have some type of loan out — that already cuts many of these businesses out," she added.

Major banks that offered the SBA-backed loans, including Bank of America, JPMorgan Chase and Wells Fargo, also prioritized larger loan applications in order to maximize loan-origination fees and their own profits, according to several class-action lawsuits representing small businesses still waiting for their approved funding.

That alleged prioritizing presents another hurdle for smaller minority- and women-owned businesses.

Up to 90% of minority and women owners shut out of Paycheck Protection Program, experts fear

"I never thought I'd get anything because I am a minority and a woman," said one owner after her loan was rejected.

www.cbsnews.com