- Many businesses that suffered the highest pandemic-induced job losses — including accommodation, food service, arts, entertainment and recreation — collectively received less than 10% of Paycheck Protection Program (PPP) loans provided in 2020, according to analysis by the Tax Policy Center.
Urban businesses received 85% of PPP funds and one-quarter of the lending went to businesses in economically distressed communities identified under the historically underutilized business zones (HUBZones), the center said.
"These data are consistent with previous findings on PPP’s mixed performance," the center said, adding that "small businesses in majority-white neighborhoods received PPP loans more quickly than similar firms in majority-Black and majority-Hispanic or Latino neighborhoods."
The Small Business Administration (SBA), aiming to buffer the harm from COVID-19, plans to provide $284 billion in forgivable PPP loans to small businesses this year after approving $525 billion in 2020.
Businesses shut down as the coronavirus spread early last year and, by April, unemployment surged to 14.7%, the highest rate since the start of such recording keeping in 1948, according to the U.S. Bureau of Labor Statistics.
PPP lending in 2020 cushioned the blow from COVID-19, helping 5.2 million small businesses maintain employment for 51 million U.S. workers, according to the SBA.
Lenders with less than $10 billion in assets provided 45% of the PPP loans in 2020, the Tax Policy Center said. JP Morgan Chase was the top lender, disbursing 4% of the loans, with Bank of America, PNC, Truist and Wells Fargo the next largest lenders.
Businesses in professional, scientific and technical services — including law and accounting firms — received the most PPP aid last year, along with construction, health care and social assistance businesses such as nursing homes and physician offices, the Tax Policy Center found.
At the start of its current PPP program, the SBA provided a brief period of early access to first-draw applications from lenders to underserved and minority small businesses, community development financial institutions, minority depository institutions, certified development companies and microloan intermediaries.
During the current lending round, the SBA has approved PPP loans totaling $104 billion to 1.3 million small businesses while trying to ensure greater access to underserved businesses, the agency said in a Feb. 10 press release.
"For first-time borrowers in this round, eligible business categories and eligible spending were expanded," the Tax Policy Center said. "And early results do show smaller loans on average and a larger share of funds toward accommodation and food service businesses."
Businesses in rural areas have received 28% of funding, while businesses requesting less than $100,000 have received 82% of loans, the SBA said.
"We are committed to taking additional steps to ensure that there is equitable access for underserved businesses," Michael Roth, senior advisor to the SBA Administrator, said in a statement.