The controversial PPP deserves a closer look to see what worked and what didn’t.
The historic program was designed to rapidly distribute up to $659 billion in forgivable loans to small businesses across the country, helping them stay afloat and keep employees paid during the pandemic.
Yet the typical small business only has enough cash to last 27 days, which is especially troubling given that the US’s 30 million small businesses employ half of our nation’s private sector workers. In other cases, the condition that 75% of the loan be used to cover payroll costs was prohibitive. Congress lowered this to 60% and extended the time frame for using PPP funds from 8 to 24 weeks with the Flexibility Act. According to a National Federation of Independent Business survey, this was popular among small businesses who heard of the change. But a poll from Alignable, a network of 5 million small businesses, shows that the majority of them never did.
This includes minority- and women-owned businesses. According to a survey from Color of Change, “51% of Black and Latinx small business owners surveyed report applying for less than $20,000, but only 12% say they received the full amount of assistance requested.” From the fintechs’ success, we know that small-dollar loans, simple applications, and fast turnaround are desperately needed, especially among underserved borrowers.
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