SPI *Research Brief Financial Security Socioeconomic Impacts of COVID

Disparate financial assistance support for small business owners

Small business owners experienced a drastic economic disruption caused by the COVID-19 pandemic. Government pandemic assistance failed to reach many small business owners, especially those historically underserved by financial institutions. Drawing on a 2021 survey of 246 small business owners, the Social Policy Institute at Washington University in St. Louis descriptively examined the extent to which small business owners sought and received business assistance, and whether applications and approval of government assistance varied by race and ethnicity. We find that though Hispanic and Black business owners applied for government assistance at a higher rate than white business owners, Black business owners were significantly less likely to be granted assistance. For example,

  • 67% of Hispanic and 44% of Black business owners applied for Paycheck Protection Program (PPP) loans compared with 39% of their white counterparts. Only 59% of Black business owners were approved compared with 100% of all others.
  • 43% of Black business owners received a Shuttered Venue Operators Grant (SVOG) compared with 64% of white business owners and 100% of all others.
  • 25% of Black business owners were approved for a delay in payroll tax compared with 75% of white business owners and 100% of all others.

Thus, while government assistance programs are crucial for the survival of many businesses during the COVID-19 pandemic, our descriptive analysis shows that these programs are significantly less likely to reach Black business owners.

Citation

Fox-Dichter, Sophia; Auguste, Daniel; Despard, Mathieu; and Michal Grinstein-Weiss. “Disparate financial assistance support for small business owners,” (2022). Social Policy Institute Research.