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NEWS | Variety of PPP Lenders “Saved Small Businesses” in 2021

COVID tested our country in countless ways. However, in spite of some shortcomings of the efforts to support those struggling – especially small businesses, and especially minority-owned small businesses – takeaways from these mistakes are laying a strong foundation for the future:


According to a recent report by Bloomberg, featured additionally in the Coleman Report, 2021 Paycheck Protection Program funds “saved smaller, more vulnerable small businesses.”


In the fog of the economy’s war against COVID, the U.S. enrolled a number of large commercial banks to distribute PPP loans. This was reportedly done “in order to deploy funds as fast as possible,” and proved to be efficiently functional; however, as quickly as banks were able to work by their pre-existing relationships shared with businesses across the country, efficiency ultimately fell short of providing even impacts.


Working quickly, these big banks and their pre-existing relationships caused some skewed distribution of the PPP loans, with “many smaller businesses shut out of the first tranche of loans in April 2020.”


Attempting to reconcile this front-loaded depletion of the first round of funds within the first two weeks of the PPP, following some rule changes on the federal level, “dozens of new lenders joined PPP” distribution efforts, including Community Development Financial Institutions (CDFIs) and online fintech lenders.


“As a result, large commercial banks originated fewer PPP loans,” and the new lenders significantly increased PPP distributions to small businesses.


Notable shifts by the increased demographics of lenders include a nine percent increase of PPP loans to small businesses from 2020 to 2021, as well as a 77 percent increase of PPP loans to self-employed individuals over the same period.


Even with the smallest average loan size of $17,000, beauty salons reportedly accrued the most additional access to loans by shifts of the variety of lenders of PPP funds, followed by taxi services, beef cattle ranching and farming, full-service restaurants, offices of lawyers, and religious organizations, respectively.


NSBA stands by common sense safeguards to protect small businesses on all fronts, particularly for federal programs designed to support our community.


Connect with NSBA to share your Small Business Story, join our fight for a strong small business community, and read the full report here.




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