9/3/2023 0 Comments Paypal ppp round 3More recent evidence shows that these trends continued until later in 2020 with almost 80 percent of small business firms reporting drops in income with stark disparities by business owners’ race.īank and Fintech Lenders in the Paycheck Protection Program Industries with a higher concentration of female, Black, LatinX, and immigrant businesses were among the hardest hit. Survey evidence shows that the number of active business owners dropped by 22 percent from February to April 2020, with Black and LatinX owners suffering most. The previous post showed that declines and recoveries in small business revenues differed along demographic lines. Small Business Experience during the Pandemic In this post, we examine financial technology (fintech) lenders participating in the PPP and find that, while disbursing only a small share of total loan amounts, they provide important support to minority business owners, who have in the past been underserved by the traditional banking industry. government launched the Paycheck Protection Program (PPP) to provide guaranteed and potentially forgivable small business loans. During the coronavirus pandemic, these small businesses- especially those owned by minorities-were hard hit as consumers reduced spending disproportionately on services that require in-person physical interaction, such as hotels and restaurants. Small businesses not only account for 47 percent of U.S employment but also provide a pathway to success for minorities and women. For example, following the correction, we do not find that Fintech lenders approved the highest percentage of applications from Black-owned small employers, as compared to firms owned by persons of other races and ethnicities. Jessica Battisto, Nathan Godin, Claire Kramer Mills, and Asani SarkarĮditor’s note: Since this post was first published, the chart entitled “Fintech Lenders Were Important Sources of Credit for Black Owners” has been updated to reflect a correction in the estimated approval rates of PPP loans.
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