
Black-Owned Businesses Received Less Than 2% of PPP Loans, White-Owned Got 83% - ugwigr
https://moguldom.com/290447/black-owned-businesses-received-less-than-2-of-ppp-loans-white-owned-got-83/
======
nickff
According to the US Census Bureau, 9.4% of businesses were black-owned, as of
2012. According to the same report, 78% of businesses were white-owned in
2012.

[https://www.census.gov/newsroom/press-
releases/2015/cb15-209...](https://www.census.gov/newsroom/press-
releases/2015/cb15-209.html)

~~~
johnmaguire2013
And 78% of businesses were white-owned as of 2012. (same source)

~~~
ewzimm
I think the most useful comparison would be to judge it against expenses,
since not all businesses would need the same amount of loans. The closest
related statistic I could find is that all minority-owned businesses generate
around 3% of revenue. The loans seem to have been given out fairly evenly as
intended, but the small impact of black businesses on the economy seems like a
much more significant disparity.

[https://www.usnews.com/news/articles/2016-09-01/most-of-
amer...](https://www.usnews.com/news/articles/2016-09-01/most-of-americas-
businesses-run-by-white-men-says-census-bureau)

~~~
TAForObvReasons
So that raises its own set of interesting questions that hits at the core of
the issues that the article discusses: why is it the case that 9.4% of
businesses are black-owned yet only generate 3% of revenue? Are there issues
with, say, obtaining a loan? Do they face challenges to growth that white-
owned businesses do not? When fixated on the statistics, it's easy to forget
the human questions around the disparity.

~~~
ewzimm
Absolutely, and that 3% is for all minority-owned businesses, not just black-
owned. One large part of the problem is likely that the higher revenue
industries are dominated by big businesses that shut out small businesses.
Here’s an industry breakdown showing a very small representation in industries
like information.

[https://blackdemographics.com/economics/black-owned-
business...](https://blackdemographics.com/economics/black-owned-
businesses/amp/)

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andrewla
To be clear:

> The full list of Paycheck Protection Program recipients released by the
> Small Business Administration on Monday shows that of the 14 percent of
> businesses that chose to identify race in their loan application, Black-
> owned businesses received 1.9 percent of loans while White-owned businesses
> received 83 percent.

So the actual percentage of black-owned businesses receiving PPP loans is
somewhere from 0.26% - 86.26%, depending on how you think the data is biased.

~~~
ugwigr
majority of studies are based on sampling

~~~
andrewla
You don’t understand what sampling is.

~~~
ugwigr
it is a self-selected sample - which is a sample. Ofcourse it introduces seld
self-selection bias. However a vast majority of studies on race in the US rely
on self reported data (for thical and legal reasons) and include some element
of self selection bias. The end.

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strombofulous
What percentage of loans were applied for by black-owned businesses? Comparing
it to population seems like a statistic that is intentionally misleading, I
would guess that a lot more businesses are owned by white people than by black
people (which is its own issue). I believe only around 10% of businesses are
even owned by a black person, so it doesn't surprise me to see that they have
a smaller piece of the PPP loan pie...

~~~
ugwigr
if the article was claiming to show "intent" to discriminate then it would
have been misleading. I wrote the article and I never claimed to show intent.
I was just showing what as effectively happening and for that the diffeerences
in ownership of eligible companies by race is irrelevant.

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macspoofing
If you're going to put together an inflammatory article the least you could do
is dive a little deeper and answer the 'Why' question. Why did black-owned
businesses receive less than 2% of PPP Loans?

~~~
ceejayoz
It doesn't take that much guessing.

[https://www.nytimes.com/2020/04/10/business/minority-
busines...](https://www.nytimes.com/2020/04/10/business/minority-business-
coronavirus-loans.html)

> Racial discrimination in banking is outlawed on paper, but it continues in
> practice — often in subtle forms. In 2018, for instance, the National
> Community Reinvestment Coalition, a nonprofit organization that works with
> banks to increase the flow of private capital into poor and underserved
> communities, sent “mystery shoppers” to 32 different banks in Los Angeles.
> It found that potential borrowers with identical financial profiles were
> treated differently by bankers based on their race. Black and Latino
> borrowers were asked for more detailed financial documents and were given
> less information about many banks’ available products than white borrowers.

~~~
danielfoster
Discrimination in lending exists, but at least with PPP loans, there was no
in-person consultation. For many businesses it was just an online application.

It probably does hold true though that white businesspeople may have better
relationships with their bankers, resulting in faster loan processing.

~~~
ceejayoz
Many lenders required an existing relationship. Disparities in access to
banking will absolutely reflect in access to PPP loans.

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dpbriggs
In other news, larger corporations are more white-owned, and had the resources
to wrangle the PPP loans.

This is a case of small businesses not having the resources to acquire the
loans in the first place. Mixing in race obfuscates and distracts from the
real issue here. It should have been easier for small businesses and harder
for larger ones to balance the scales.

~~~
aSplash0fDerp
We actually have a snapshot on Youtube of personal wealth channels promoting
PPP and EIDL during that window.

You can see exactly who was stepping up with quality information and even
sort/poll by race if thats your thing.

It was being promoted as free money by some and many offered solid strategies
for small businesses to make the 2nd cut and skip the lines.

~~~
dpbriggs
Could you elaborate?

I'm not quite sure what you're trying to say.

Businesses are only concerned with ethics if it improves their bottom line.
'Free' money in uncertain times is an opportunity any business will seize if
it has the means to obtain it.

~~~
aSplash0fDerp
I think this is the video that piqued my interest on March 28th. The "how-tos"
and "what-is-its" spread like wildfire after that day.

[https://m.youtube.com/watch?feature=youtu.be&v=dwuUAGpWtlo](https://m.youtube.com/watch?feature=youtu.be&v=dwuUAGpWtlo)

We are 15 days into SIP at this point. I do not need PPP/EIDL, but as a prior
SBO, I followed this topic with interest. The quality of info was high and
SB's had days and sometimes weeks notice on navigating the process.

I read that CVT went on to make $300k a day on YT (somedays) by providing
daily updates on stimulus, PPP, EIDL, etc, so the incentive was there to get
the word out.

If race is a factor, you'll find it was being discussed in their circles with
the same delivery as Brian on YT. If not.. They should have picked a better
accountant.

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krisroadruck
What percentage of businesses with paid employees are black owned? Without
this bit of data, the rest doesn't have any context.

~~~
ugwigr
In my opinion, it does not matter if 0.1% of companies are Black-owned. In my
article, I am not looking to establish intent. I am just showing what is
effectively happening and for that the percentage you asked about is
irrelevant.

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cojoke
That site is a mobile ad nightmare.

Also should the thread title mention that only 14% of PPP application
respondents provided info on race?

~~~
ugwigr
The sample size (14%) was large enough statistically.

A majority of modern studies about race rely on sampling.

------
screye
For context :

Blacks own about 2.6 million businesses or 9.5 percent of all U.S. businesses

The 19 million white-owned businesses have 88 percent of the overall sales,
and control 86.5 percent of U.S. employment, while black businesses have a
mere 1.3 percent of total American sales, and 1.7 percent of the nation’s
employees.

___

The article doesn't clarify if by percent they mean number of loan
applications approved or % of loan funding allocated.

If it the former, then black businesses have received far fewer loans than
their representative amount. If it is by revenue, then it is actually inline
with the ir representation in population.

___

> Monday shows that __of the 14 percent of businesses that chose to identify
> race __in their loan application, Black-owned businesses received 1.9
> percent of loans while White-owned businesses received 83 percent.

Might be interesting to see if this trend held when black owners did not
identify themselves.

~~~
ugwigr
The percentages you mentioned would be relevant if I, the author, was look to
show intent to discriminate but I was not. I am just showing the effect of the
program and for that the percentages you mentioned are entirely irrelevant.

The sample size (14%) was large enough statistically. Might also be
interesting to see if this trend was larger when white owners did not identify
themselves.

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panzagl
Rejection rate seems like it would be more useful than just percentage of
overall acceptance.

~~~
ugwigr
Rejection rate might give a clue to intent - but even then not really cause it
would be hard to tell whether the difference in rejection is justified by
other non-racial factors. I wrote the article to show the effect of the policy
not the intent of the implementation and for that the metrics I used were
appropriate

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ugwigr
I am the author of article. looking at difference in ownership of companies
more broadly would be useful to establish intent to discriminate but that is
NOT what the article claims to show. I simply show what is effectively
happening and for that the stats on ownership of eliegible companies by race
are irrelevant.

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Ghjklov
Maybe there are fewer black-owned businesses than white-owned ones.

~~~
ugwigr
In my article, I am not looking to establish intent. I am just showing what is
effectively happening and therefore to make my point it does not matter at all
where fewer companies are Black-owned

