By Amy Yee, Andre Tartar, and Marie Patino, Photo: Bryan Tarnowski/Bloomberg, Bloomberg CityLab, August 22, 2022
To see the difference between year one and year two of the US Paycheck Protection Program, just look to Baton Rouge, Louisiana.
In 2020, when the US announced emergency loans to help small businesses struggling under Covid-19 shutdowns, funding went disproportionately to the higher-income zip codes of Louisiana’s capital. Better-resourced firms such as medical and legal offices collected most of the relief aid. But in 2021, more loans went to lower-income neighborhoods of the city—to beauty salons, barber shops, day care centers and other more vulnerable enterprises, according to a Bloomberg analysis of Small Business Administration data updated last month.
So, what changed? By 2021, the Small Business Administration, the program’s administrator, had admitted about 600 new lenders, including small community banks that serve minorities, and allowed more sole proprietors and self-employed people to participate. The SBA also kicked off its later round of lending in 2021 by prioritizing applications from businesses with fewer than 20 employees during the first two weeks.
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