Los Angeles Times, May 1, 2021, Businesses in majority-white communities received PPP loans at higher rates, analysis shows
Through the CARES Act, Congress ordered the Small Business Administration and the Treasury Department to issue guidance to lenders to ensure that the loan program “prioritizes small business concerns and entities in underserved and rural markets.”
Yet a Reveal analysis of more than 5 million PPP loans found widespread racial disparities in how those loans were distributed. A variety of factors contributed to the disparities, including failures by both banks and the government to adequately ensure fairness in the program, according to federal records and lending experts.
Jesse Van Tol, chief executive of the fair lending group National Community Reinvestment Coalition, said the disparities show that banks failed to live up to a 44-year-old federal law that requires them to equitably serve all communities where they do business.
The racial disparities in the PPP rollout may not be patently illegal, Van Tol said, because the law has limited mechanisms for accountability. But of the disparities, he said: “Is it fair? No. Is it equitable? No. Does it violate the spirit of the Community Reinvestment Act? Absolutely.”
