A Crusader analysis of Blacks businesses applying for Paycheck Protection Loans shows that only nine received loans of $1 million or more, unlike their white counterparts. No Black businesses received loans of $5 million or higher. It gets worse.
By Erick Johnson
The Fourth of July was over, but more fireworks were on the way. On Sunday, July 5, the U.S. Department of Treasury unveiled the latest loan recipients of its $669 billion Paycheck Protection Program (PPP). More than a million purveyors of American capitalism took advantage of a program designed to keep businesses afloat and employees on the payroll during the coronavirus pandemic.
In Chicago, nearly 41,000 were given loans that ranged from hundreds of dollars to $10 million. Out of this group, 2,622 recipients dared to indicate their race when they applied for the loan.
The applicants included 273 Blacks, 330 Hispanics, 446 Asians and 1,569 whites.
Together, they received $283,570,012 in loans through the Small Business Administration as part of President Donald Trump’s Coronavirus Aid Relief and Economic Security Act (CARES Act). This group was among 40,880 businesses in Chicago that received at least $7.5 billion in PPP loans.
In Chicago’s Black business community, where banks for decades had been slow to grant loans to struggling businesses, the program set off an unprecedented wave of loans. But as Blacks were reaping hundreds of thousands of dollars in forgivable loans, whites across town and in the Loop were reaping PPP loans in the millions, with some as big as $10 million.
A Crusader analysis of the list of PPP loan recipients offers a sobering glimpse of the economic disparities between Chicago’s ethnic business groups and the city’s prosperous white businesses, which are not just surviving the pandemic, but thriving with the help of the federal government.
There are six levels of loan funding in which recipients could apply for a PPP loan. They include loans with amounts ranging from $5 million to $10 million. The next highest were loans from $2 million to $5 million. The third highest loans ranged from $1 million to $2 million. Another loan category ranged from $350,000 to $1 million.
The specific amount of these loans to individual businesses was not disclosed. The names of businesses that were awarded the lowest loan amounts were not disclosed. For all loan levels, applicants did not have to indicate their race or gender on their application.
The smallest of these loans were under $150,000. The names of businesses were not made public. Like larger loan applicants, they did not have to indicate their race or gender on their PPP loan applications.
Of a total of 40,880 PPP loan recipients in Chicago, 38,258 chose to keep their racial identity off their application.
The 2,622 recipients who submitted their racial identity collectively provided a sample of a racial disparity that may represent a disturbing reality of the overall pool of PPP applicants.
Among this group, the Crusader found that at every level of loan funding, whites had at least five times the number of loan recipients than minorities.
As you go up the scale in loan amounts, the number of Black and minority recipients dramatically declines, more so than for whites.
For loans over $1 million, Black-owned businesses received just nine PPP loans, compared to 49 for whites. In fact, among this group of loan applicants reporting their race, whites had more loans over $1 million than Asians, Indian Americans and Blacks combined.
For the largest loans between $5 million to $10 million, where race was reported there were two white loan recipients while Blacks, Hispanics, Asians and Indian Americans had none.
For whites, among non-race reporting applicants that number is likely to be higher. So far, 72 businesses have received PPP loans between $5 million to $10 million.
Most of these businesses did not specify whether they were white or Black-owned, but the Crusader counted 37 located in the Loop, two on the Gold Coast and nine in white neighborhoods on the Near North Side or North Side, including River North, Goose Island, Lakeview, Uptown and Jefferson Park.
For loans between $2 million to $5 million, there were 14 white recipients. Similar loans were awarded to three Blacks and three Hispanics.
The Black firms that received $2 million to $5 million loans include Trice Construction Company in the Loop, AGB Investigative Services in Auburn Gresham, and Milhouse Engineering and Construction, whose headquarters are located downtown.
PPP loan amounts were based on the number of employees.
AGB Investigative Services listed 500 employees with its application, but questions remain whether the Black-owned company was eligible to receive a larger loan or whether it chose to apply for a $2 million to $5 million loan.
Two white-owned businesses located in the Loop and Edgewater, employed 32 and 40 employees, respectively, and both received loans between $5 million to $10 million.
In addition to employee size, Cecil B. Lucy, Esq., and Chief Financial Officer, explained that the operating budget was also the reason the DuSable Museum of African American History received a PPP loan between $150,000 to $350,000, compared to the $2 million to $5 million loans that were awarded to the Museum of Science and Industry and the Shedd Aquarium. The Field Museum received a PPP loan between $5 million to $10 million. While these large museums listed workforces of nearly 500 on their loan applications, the DuSable indicated only 31 employees on its payroll.
“We don’t have the development and staff like those museums, but we are one of the most important institutions,” Lucy said. “If you have a small budget, your eligibility for larger loan amounts is going to be smaller. We’ve been underfunded historically—a fact reflected in racism when it comes to Black museums.”
The disparities are also prevalent in other funding levels of PPP loans.
Thirty whites received loans between $1 million to $2 million, while six went to Blacks, three to Hispanics and two to Asian applicants. For loans between $350,000 to $1 million, 166 went to white applicants, while 11 Blacks, 20 Hispanics and 13 Asians received similar loans. While 227 whites received loans ranging from $150,000 to $350,000, only 28 Blacks, 33 Hispanics and 39 Asians received similar loans.The most dramatic contrast in PPP loans among whites and their ethnic counterparts are loans under $150,000. Some 1,079 whites received them, compared to 225, Blacks, 271 Hispanics and 392 Asians.
Altogether, Blacks recipients who gave their racial identity were awarded $27,431,783 in PPP loans. Hispanics received $32,384,380 and Asians received $26,623,444. American Indians received just $156,159.
PPP loans do not have to be repaid if they are used to cover payrolls, keep workers and pay for some overheads.
Business owners were required to certify on the PPP application that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
Business owners can still apply for PPP loans through August 8.
As one of Chicago’s Black newspapers with a citywide distribution, our mission is to provide readers with factual news and in-depth coverage of its impact in the Black community. The Rona Reports are stories of Black resilience in the face of the COVID-19 pandemic. This Rona Report is made possible by the Chicago COVID-19 Journalism Fund, which is a grant from the Robert R. McCormick Foundation.
First published in the print edition of the Chicago Crusader Newspaper on July 18, 2020.