White Male-Owned Businesses In MA Received Majority Of PPP Loans

MASSACHUSETTS — The vast majority of Massachusetts Paycheck Protection Program recipients who disclosed their race and ethnicity race were white, accord to data released by the Small Business Administration Monday. Business-owners who disclosed their gender were mostly men.

Over 90 percent of the 112,000 loan recipients did not disclose race — the initial version of the application had no section for that information — but among the 10,796 that did, 9,165 were white.

Just 210 recipients were Black or African American. There were 596 Hispanic recipients and 769 Asian recipients.

PPP loans were established as part of the federal government's CARES Act in response to coronavirus. They function almost like grants: They will be forgiven as long as businesses keep employees on the payroll and don't cut their pay. The money does not necessarily have to go directly to employees as long as the business keeps paying them; it can also be used to pay interest on mortgages, rent and utilities.

The Small Business Administration data shows that nearly 5 million businesses have received PPP loans totaling more than $521 billion. The U.S. Treasury says that money has supported 51.1 million jobs — as much as 84 percent of America's small business employees. In Massachusetts, small business revenue fell by more than half at the height of the crisis.

It's unclear precisely how many minority-owned businesses there are in Massachusetts, but the state is about 77 percent white, while PPP-loan recipients who disclosed their race were about 85 percent white.

Similar disparities exist in the size of loans. Fifty-six percent of loans to Black-owned businesses were under $50,000, versus just 43 percent of loans to white-owned businesses. Only one Black-owned business received a loan over $2 million dollars. Seventy-two white-owned businesses did.

The same pattern exists for gender: among 26,731 loan recipients who disclosed their genders, more than three-quarters were men. Among the smaller set of recipients for which both race and gender data is available, about two-thirds were white men.

Speaking to Boston Business Journal, Segun Idowu, executive director of the Black Economic Council of Massachusetts (BECMA), said that the way the program was initially set up shut out Black-owned businesses. A confused roll-out made businesses with fewer staff, which includes many Black-owned businesses, less likely to apply early on.

The same disparity in size made it harder for minority-owned businesses that did apply to get loans, according to an analysis by the nonprofit Center for Responsible Lending: lending was done through for-profit lenders, so larger businesses were the priority.

“It’s woefully inadequate,” Idowu told the Boston Business Journal. “We know there are at least 1,200 Black-owned firms in the state. Those numbers (of PPP recipients) don’t even come close to what the need was.”

The Paycheck Protection Program was extended earlier this week and will continue taking applications through Aug. 8.