“As the Treasury Secretary, you must use your authority to ensure that the structural issues with the PPP do not continue to exclude businesses of color.”
A coalition of civil rights, faith, and community development organizations sent a letter to U.S. Secretary of the Treasury Steven Mnuchin urging him to set-aside $10 billion out of the $310 billion in replenished Small Business Administration (SBA) Paycheck Protection Program (PPP) funds for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs). The coalition also seeks that at least 50% of all the new loan dollars are reserved for small business owners, as the most disadvantaged businesses only have a single employee–the business owner.
CDFIs and MDIs have the strongest track record of serving borrowers of color and are least likely to be able to access PPP funding under its current structure. The SBA will resume accepting PPP applications from participating lenders on Monday, April 27, 2020 at 10:30 a.m. ET.
“Businesses of color are a substantial source of income and employment in communities of color—accounting for 8.7 million jobs at total annual payroll of $280 billion, and $1.3 trillion in revenue—yet they were almost entirely excluded from the first round of funding in the PPP,” wrote the group. “CDFIs and MDIs have strong track records of lending to underserved businesses as they best understand the needs of small businesses of color and have systems to adequately process loans to them. However, without a specific allocation, the expanded PPP funding will run out before CDFIs and MDIs can access it, thwarting Congressional intent and the overall goals of the program. … As the Treasury Secretary, you must use your authority to ensure that the structural issues with the PPP do not continue to exclude businesses of color. Because structural issues remain with the new SBA PPP, businesses of color will fail to get their fair share unless dedicated funding is provided for CDFIs and MDIs.”
Additionally, the group urged Secretary Mnuchin to implement and require a robust data collection process for all lenders. The group stressed that transparency is essential to the PPP program and that data shows the public which businesses are being served with public dollars. Reports have estimated that more than 90% of the original $349 billion, which was initially appropriated in the CARES Act, went to wealthier and non-diverse businesses.
The following is a list of organizations who signed the letter to Secretary Mnuchin:
U.S. Black Chambers, Inc.
American Business Immigration Coalition
Association for Enterprise Opportunity
Center for Responsible Lending
Community Development Bankers Association
Community Development Venture Capital Alliance
Hope Credit Union
Leadership Conference on Civil and Human Rights
Main Street Alliance
NAACP Legal Defense and Educational Fund, Inc.
NALCAB – National Association for Latino Community Asset Builders
Natural Capital Investment Fund
National Community Investment Fund
National Urban League
National Baptist Convention USA, Inc.
Opportunity Finance Network
Page 30 Coalition
Partners for Common Good