Black Businesses Were Denied Pandemic Loans Because Of Racial Bias

Abandoned store front
Shiavon Chatman
November 15, 2021

During the early stages of the pandemic, many businesses depended on loans through the Paycheck Protection Program (PPP) – an aspect of the first pandemic stimulus bill – to stay afloat. 

But Black business owners reported they were struggling to get approved. Why?

It turned out that business owners were 70% more likely to be approved for a PPP loan when they applied online compared to at a bank. What was the reason for the difference? 

Racial bias, it turns out. There was a “structural flaw” in the program, said Mehrsa Baradaran, a law professor at UC Irvine. “Any time you ... give banks the ability to choose which customers it prioritizes, you’re going to have disparities,” she explained

In other words? Bank employees across the country discriminated against Black applicants. One Black entrepreneur attempted to close the gap, though.

Diddy launched a program in 2020, called Our Fair Share, to help Black businesses get support with the application process. A noble effort, but it doesn’t address the bigger issue: widespread racial bias in the financial industry.

The disparities in PPP loan approvals is more evidence that Black business owners are frequently left on their own America’s economy, even during a devastating pandemic. Cheers to Diddy for making an effort to address the problem – but the issue is much bigger than any one celebrity can effectively address.

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