Alignable: Minority-Owned Businesses Struggle To Secure PPP Loans & Community Bank Heroes

DATA INSIGHTS | PRESS RELEASE |

The following Alignable Trend Tracker summary report is based on highlights from several surveys shared with the media regarding the Paycheck Protection Program in late May, 2020.

New Alignable Polls Say Minority-Owned Businesses Struggle To Secure PPP Loans

Alignable.com, the largest online referral network for small businesses, has just compiled the results of several recent polls on the Paycheck Protection Program that show it has fallen short for many small business owners. 

• Some of the hardest hit include companies owned by minorities and minority women, as well as small business people just starting as entrepreneurs. 
• Despite problems surrounding the PPP, Community Banks have emerged as heroes, as several Major Money Center Banks only started responding to small businesses in the second funding round. But Community Banks have consistently helped small businesses to secure the loans.  

These are the most comprehensive polls available, as more than 160,000 small business owners participated from April 3 to May 16, 2020.

39% Of Small Businesses Still Wait For Federal Funds

The first poll shows that 39% of small businesses still don’t have their loans and the entire loan process seems to be slowing down. 

• 61% have cash in hand
• 6% are approved & waiting for cash 
• 19% are still waiting for approval
• 8% were denied
• 6% tried to apply, but their banks couldn’t process their applications

Minorities & Women Encounter PPP Challenges

We also found that small businesses owned by minorities and minority women had a tougher time securing loans than other small businesses and it took longer for them to receive their cash, as the chart above indicates.

• For small businesses owned by minorities, only 56.4% have been approved and only 50.8% have their funds already. It's a similar situation for women who are also minorities: only 58.4% have been approved, and only 51.6% have their cash in hand.
• Compare those findings to all other businesses (not minority or women-owned). More than three-quarters of those businesses (76.6%) were approved for PPP loans, and 69.6% have their cash already. 

Older Businesses Found Securing Loans Easier

Small businesses that have been open less than a year found securing loans very challenging. In contrast, those operating the longest, 15+ years, had the easiest time in the PPP process.

Community Banks Deemed Small Business Heroes 

Looking at this story from the perspective of which banks offered small business loans when, it’s abundantly clear that Community Banks were the early heroes in the process and continue to be for those still seeking loans. 
 
As you can see above, Community Banks have been the best places for small businesses to land the loans since the process began in early April. In the first round of PPP funding, many larger banks pushed off applications from smaller businesses, favoring larger businesses instead. Nearly 42 percent of small businesses on April 13 said they obtained loans from community banks, compared to around 13% who received PPP loans from large banks. 
 
But during the second round of funding, larger banks started responding to significant public backlash and took on more of the small business loans. Yet, Community Banks are still way ahead.

For more details on these Alignable Polls and other findings, please contact Chuck Casto at chuck@alignable.com.  Also, feel free to comment on these trends below.