HR Dive, July 23, 2020: Black business owners discouraged from applying for PPP loans, study says
The PPP loan program, a component of the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law March 27, was created to primarily assist small business owners with employee salaries and other expenses. The Small Business Administration (SBA), in coordination with the Treasury Department, oversees the program. But U.S. banks distribute the loans, which has caused some controversy.
The intentions of the program are good, but there’s a flaw in the PPP distribution structure, Mehrsa Baradaran, a law professor specializing in banking law at the University of California, Irvine, told Banking Dive, a HR Dive sister publication. “We rely on banks, and banks can choose their customers,” Baradaran said. In regard to banks providing the loans on a first-come, first-served basis, they “didn’t have a legal obligation to do it, and that’s the problem,” she said.