Small Businesses Furious at Paycheck Protection Program Structure that Allowed Banks to Make Their Own Rules

With allegations that major banks shuffled Paycheck Protection Program applications to prioritize larger loan amounts and bigger businesses, Main Street businesses are furious. This possibility points to a clear design flaw in the program that tried to use the private lending market, already rife with discrimination and putting profits over all, as the mechanism for small business relief. Small businesses are demanding that any new funding must come directly to them via subsidies, not loans, and it must prioritize those who were left out.

Business owners of color are particularly vulnerable to discrimination in the lending system. A report from the Center for Responsible Lending shows that a large majority of minority owned businesses, including 95 percent of Black business owners, have little chance of receiving a PPP loan through a bank or credit union without existing relationships to 7(a) lenders. The priorities of large banks are being revealed, and this discrimination is playing out in real time.

Congress must act not only to expand access to the funds, but to dramatically restructure the program to include the small businesses moved aside as big chains and bigger businesses got first in line.