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Since March 2020, businesses in the U.S. have been struggling to continue operations in the face of a global pandemic. The COVID-19 pandemic has resulted in a recession because of the widespread closures of non-essential businesses enacted to reduce the spread of the virus. Even as things begin to reopen, people are less likely to go out due to possible health risks. In response, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act which created the Paycheck Protection Program (PPP). The PPP is a lending program that provides money, in a potential grant format, to small businesses to help them weather the economic effects of the pandemic. The majority of the loan needs to be allocated for employee salaries and then the remainder can be used for other business expenses like rent and loan payments. The purpose of this study was to determine whether the disparities in small business lending we have detected prior to the COVID-19 pandemic continued with implementation of the PPP program.
The number of businesses owned by women is on the rise, but female entrepreneurs still face more obstacles than men in obtaining small business loans. This study found that Black women business owners face the most difficulty getting loans from banks. The National Community Reinvestment Coalition (NCRC) evaluated 120 matched-pair tests involving a mix of gender and race combinations at 90 bank branches belonging to 54 different financial institutions in the Atlanta, Georgia, and Washington, D.C., metropolitan statistical areas (MSA). NCRC found that while all testers received inadequate treatment from banking personnel, women and people of color reported the worst experiences.