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Black-Owned Businesses Received Less Than 2% of PPP Loans, White-Owned Got 83%

46 points by ugwigr 6y ago

macspoofing 6y ago
If you're going to put together an inflammatory article the least you could do is dive a little deeper and answer the 'Why' question. Why did black-owned businesses receive less than 2% of PPP Loans?
- ceejayoz 6y ago
  It doesn't take that much guessing. https://www.nytimes.com/2020/04/10/business/minority-business-coronavirus-loans.html https://www.nytimes.com/2020/04/10/business/minority-busines... > Racial discrimination in banking is outlawed on paper, but it continues in practice — often in subtle forms. In 2018, for instance, the National Community Reinvestment Coalition, a nonprofit organization that works with banks to increase the flow of private capital into poor and underserved communities, sent “mystery shoppers” to 32 different banks in Los Angeles. It found that potential borrowers with identical financial profiles were treated differently by bankers based on their race. Black and Latino borrowers were asked for more detailed financial documents and were given less information about many banks’ available products than white borrowers.
  - deleted 6y ago
    [deleted]
  - danielfoster 6y ago
    Discrimination in lending exists, but at least with PPP loans, there was no in-person consultation. For many businesses it was just an online application. It probably does hold true though that white businesspeople may have better relationships with their bankers, resulting in faster loan processing.
    - ceejayoz 6y ago
      Many lenders required an existing relationship. Disparities in access to banking will absolutely reflect in access to PPP loans.
  - macspoofing 6y ago
    You have no basis for linking those two instances. You have no basis to claim there was any intent of any discrimination in the loan program. You have no basis to claim there even was discrimination in the loan program. All those assumptions need evidence, and you just asserted that conclusion. This is very similar reasoning to alien conspiracy theorists, who look at something in the night sky and assert "It can't be A, it can't be B, it can't be C, therefore it must be Aliens" The author was also dishonest. They purposely framed their blog post in a way that would you lead you to this.
    - ceejayoz 6y ago
      Yes, why should we link concrete evidence that minorities are discriminated against in banking with their access to a particular banking program? That would be just crazy.
      - macspoofing 6y ago
        You can't do that because there could be alternative explanations in this specific case (like in every case), even in a world where, as you claim, certain minorities are discriminated against by banks and loans[1]. In such a world you need even more evidence because your biases are pushing in a specific direction and so it takes more work to be objective. You do nobody any good by claiming racism where there is none. In fact you do damage, the same way that hate crime hoaxes and false sexual assault allegations do damage to real hate crime and sexual assault victims. It's the responsible thing to do. And I'm not saying we shouldn't look for an explanation. The null-hypothesis is that these loans are allocated proportionally, so a deviation does require an explanation, which will probably be interesting, most likely multi-variate, and may include a component of discrimination. The nature of that discrimination may be different than what you assumed - so how are you supposed to fix it, if you were too lazy to actually dig to find the actual problem. Why is that controversial? [1] Truth be told, I actually see debt in a negative light. I haven't seen a lot of small business survive when starting with a bank loan - it's like you're setting yourself to fail because not only do you have business expenses, and not only did you way overestimate the sales you were going to do (a common trait of entrepreneurs), but also you have loan payments that drain your revenues. And those loans are usually personally guaranteed, so if your business tanks, you are still responsible for them. I wish debt was harder to come by across the board.
- jandrese 6y ago
  You'll probably have to do the work yourself. Luckily the Treasury released the data in a convenient format: https://sba.box.com/s/tvb0v5i57oa8gc6b5dcm9cyw7y2ms6pp https://sba.box.com/s/tvb0v5i57oa8gc6b5dcm9cyw7y2ms6pp
- ugwigr 6y ago
  I wrote the article - I don't think it is inflamatory. It is irrelevant if 0% of business owners are Black. The US Treasury (which controls the IRS, money printing and funds the government) should not abuse its power to favor a certain segment of the population. The government should not bail out private companies.
  - missedthecue 6y ago
    I feel like the "don't bail out private companies" narrative applies when doing so prevents creative destruction. When the government straight up bans most companies from doing business, with little warning, and for a prolonged and unpredictable amount of time, I think some level of nuance should be applied.
  - macspoofing 6y ago
    Don't gas-light, you knew exactly what you were doing. >The government should not bail out private companies. Approximately 0 people came to that conclusion reading your blog, because you used a dishonest click-bait title at a time of racial sensitivity.
cojoke 6y ago
That site is a mobile ad nightmare. Also should the thread title mention that only 14% of PPP application respondents provided info on race?
- ugwigr 6y ago
  The sample size (14%) was large enough statistically. A majority of modern studies about race rely on sampling.
nickff 6y ago
According to the US Census Bureau, 9.4% of businesses were black-owned, as of 2012. According to the same report, 78% of businesses were white-owned in 2012. https://www.census.gov/newsroom/press-releases/2015/cb15-209.html https://www.census.gov/newsroom/press-releases/2015/cb15-209...
- johnmaguire2013 6y ago
  And 78% of businesses were white-owned as of 2012. (same source)
  - nickff 6y ago
    I was updating my comment with this statistic as you were posting yours; apologies if it 'steals your thunder'.
  - ewzimm 6y ago
    I think the most useful comparison would be to judge it against expenses, since not all businesses would need the same amount of loans. The closest related statistic I could find is that all minority-owned businesses generate around 3% of revenue. The loans seem to have been given out fairly evenly as intended, but the small impact of black businesses on the economy seems like a much more significant disparity. https://www.usnews.com/news/articles/2016-09-01/most-of-americas-businesses-run-by-white-men-says-census-bureau https://www.usnews.com/news/articles/2016-09-01/most-of-amer...
    - TAForObvReasons 6y ago
      So that raises its own set of interesting questions that hits at the core of the issues that the article discusses: why is it the case that 9.4% of businesses are black-owned yet only generate 3% of revenue? Are there issues with, say, obtaining a loan? Do they face challenges to growth that white-owned businesses do not? When fixated on the statistics, it's easy to forget the human questions around the disparity.
      - 6y ago
Ghjklov 6y ago
Maybe there are fewer black-owned businesses than white-owned ones.
- deleted 6y ago
  [deleted]
- ugwigr 6y ago
  In my article, I am not looking to establish intent. I am just showing what is effectively happening and therefore to make my point it does not matter at all where fewer companies are Black-owned
strombofulous 6y ago
What percentage of loans were applied for by black-owned businesses? Comparing it to population seems like a statistic that is intentionally misleading, I would guess that a lot more businesses are owned by white people than by black people (which is its own issue). I believe only around 10% of businesses are even owned by a black person, so it doesn't surprise me to see that they have a smaller piece of the PPP loan pie...
- ugwigr 6y ago
  if the article was claiming to show "intent" to discriminate then it would have been misleading. I wrote the article and I never claimed to show intent. I was just showing what as effectively happening and for that the diffeerences in ownership of eligible companies by race is irrelevant.
dpbriggs 6y ago
In other news, larger corporations are more white-owned, and had the resources to wrangle the PPP loans. This is a case of small businesses not having the resources to acquire the loans in the first place. Mixing in race obfuscates and distracts from the real issue here. It should have been easier for small businesses and harder for larger ones to balance the scales.
- aSplash0fDerp 6y ago
  We actually have a snapshot on Youtube of personal wealth channels promoting PPP and EIDL during that window. You can see exactly who was stepping up with quality information and even sort/poll by race if thats your thing. It was being promoted as free money by some and many offered solid strategies for small businesses to make the 2nd cut and skip the lines.
  - dpbriggs 6y ago
    Could you elaborate? I'm not quite sure what you're trying to say. Businesses are only concerned with ethics if it improves their bottom line. 'Free' money in uncertain times is an opportunity any business will seize if it has the means to obtain it.
    - aSplash0fDerp 6y ago
      I think this is the video that piqued my interest on March 28th. The "how-tos" and "what-is-its" spread like wildfire after that day. https://m.youtube.com/watch?feature=youtu.be&v=dwuUAGpWtlo https://m.youtube.com/watch?feature=youtu.be&v=dwuUAGpWtlo We are 15 days into SIP at this point. I do not need PPP/EIDL, but as a prior SBO, I followed this topic with interest. The quality of info was high and SB's had days and sometimes weeks notice on navigating the process. I read that CVT went on to make $300k a day on YT (somedays) by providing daily updates on stimulus, PPP, EIDL, etc, so the incentive was there to get the word out. If race is a factor, you'll find it was being discussed in their circles with the same delivery as Brian on YT. If not.. They should have picked a better accountant.
- 6y ago
krisroadruck 6y ago
What percentage of businesses with paid employees are black owned? Without this bit of data, the rest doesn't have any context.
- ugwigr 6y ago
  In my opinion, it does not matter if 0.1% of companies are Black-owned. In my article, I am not looking to establish intent. I am just showing what is effectively happening and for that the percentage you asked about is irrelevant.
panzagl 6y ago
Rejection rate seems like it would be more useful than just percentage of overall acceptance.
- ugwigr 6y ago
  Rejection rate might give a clue to intent - but even then not really cause it would be hard to tell whether the difference in rejection is justified by other non-racial factors. I wrote the article to show the effect of the policy not the intent of the implementation and for that the metrics I used were appropriate
andrewla 6y ago
To be clear: > The full list of Paycheck Protection Program recipients released by the Small Business Administration on Monday shows that of the 14 percent of businesses that chose to identify race in their loan application, Black-owned businesses received 1.9 percent of loans while White-owned businesses received 83 percent. So the actual percentage of black-owned businesses receiving PPP loans is somewhere from 0.26% - 86.26%, depending on how you think the data is biased.
- ugwigr 6y ago
  majority of studies are based on sampling
  - andrewla 6y ago
    You don’t understand what sampling is.
    - ugwigr 6y ago
      it is a self-selected sample - which is a sample. Ofcourse it introduces seld self-selection bias. However a vast majority of studies on race in the US rely on self reported data (for thical and legal reasons) and include some element of self selection bias. The end.
screye 6y ago
For context : Blacks own about 2.6 million businesses or 9.5 percent of all U.S. businesses The 19 million white-owned businesses have 88 percent of the overall sales, and control 86.5 percent of U.S. employment, while black businesses have a mere 1.3 percent of total American sales, and 1.7 percent of the nation’s employees. ___ The article doesn't clarify if by percent they mean number of loan applications approved or % of loan funding allocated. If it the former, then black businesses have received far fewer loans than their representative amount. If it is by revenue, then it is actually inline with the ir representation in population. ___ > Monday shows that of the 14 percent of businesses that chose to identify race in their loan application, Black-owned businesses received 1.9 percent of loans while White-owned businesses received 83 percent. Might be interesting to see if this trend held when black owners did not identify themselves.
- ugwigr 6y ago
  The percentages you mentioned would be relevant if I, the author, was look to show intent to discriminate but I was not. I am just showing the effect of the program and for that the percentages you mentioned are entirely irrelevant. The sample size (14%) was large enough statistically. Might also be interesting to see if this trend was larger when white owners did not identify themselves.
ugwigr 6y ago
I am the author of article. looking at difference in ownership of companies more broadly would be useful to establish intent to discriminate but that is NOT what the article claims to show. I simply show what is effectively happening and for that the stats on ownership of eliegible companies by race are irrelevant.

46 points by ugwigr 6y ago

If you're going to put together an inflammatory article the least you could do is dive a little deeper and answer the 'Why' question. Why did black-owned businesses receive less than 2% of PPP Loans?

ceejayoz 6y ago
It doesn't take that much guessing. https://www.nytimes.com/2020/04/10/business/minority-business-coronavirus-loans.html https://www.nytimes.com/2020/04/10/business/minority-busines... > Racial discrimination in banking is outlawed on paper, but it continues in practice — often in subtle forms. In 2018, for instance, the National Community Reinvestment Coalition, a nonprofit organization that works with banks to increase the flow of private capital into poor and underserved communities, sent “mystery shoppers” to 32 different banks in Los Angeles. It found that potential borrowers with identical financial profiles were treated differently by bankers based on their race. Black and Latino borrowers were asked for more detailed financial documents and were given less information about many banks’ available products than white borrowers.
- deleted 6y ago
  [deleted]
- danielfoster 6y ago
  Discrimination in lending exists, but at least with PPP loans, there was no in-person consultation. For many businesses it was just an online application. It probably does hold true though that white businesspeople may have better relationships with their bankers, resulting in faster loan processing.
  - ceejayoz 6y ago
    Many lenders required an existing relationship. Disparities in access to banking will absolutely reflect in access to PPP loans.
- macspoofing 6y ago
  You have no basis for linking those two instances. You have no basis to claim there was any intent of any discrimination in the loan program. You have no basis to claim there even was discrimination in the loan program. All those assumptions need evidence, and you just asserted that conclusion. This is very similar reasoning to alien conspiracy theorists, who look at something in the night sky and assert "It can't be A, it can't be B, it can't be C, therefore it must be Aliens" The author was also dishonest. They purposely framed their blog post in a way that would you lead you to this.
  - ceejayoz 6y ago
    Yes, why should we link concrete evidence that minorities are discriminated against in banking with their access to a particular banking program? That would be just crazy.
    - macspoofing 6y ago
      You can't do that because there could be alternative explanations in this specific case (like in every case), even in a world where, as you claim, certain minorities are discriminated against by banks and loans[1]. In such a world you need even more evidence because your biases are pushing in a specific direction and so it takes more work to be objective. You do nobody any good by claiming racism where there is none. In fact you do damage, the same way that hate crime hoaxes and false sexual assault allegations do damage to real hate crime and sexual assault victims. It's the responsible thing to do. And I'm not saying we shouldn't look for an explanation. The null-hypothesis is that these loans are allocated proportionally, so a deviation does require an explanation, which will probably be interesting, most likely multi-variate, and may include a component of discrimination. The nature of that discrimination may be different than what you assumed - so how are you supposed to fix it, if you were too lazy to actually dig to find the actual problem. Why is that controversial? [1] Truth be told, I actually see debt in a negative light. I haven't seen a lot of small business survive when starting with a bank loan - it's like you're setting yourself to fail because not only do you have business expenses, and not only did you way overestimate the sales you were going to do (a common trait of entrepreneurs), but also you have loan payments that drain your revenues. And those loans are usually personally guaranteed, so if your business tanks, you are still responsible for them. I wish debt was harder to come by across the board.
jandrese 6y ago
You'll probably have to do the work yourself. Luckily the Treasury released the data in a convenient format: https://sba.box.com/s/tvb0v5i57oa8gc6b5dcm9cyw7y2ms6pp https://sba.box.com/s/tvb0v5i57oa8gc6b5dcm9cyw7y2ms6pp
ugwigr 6y ago
I wrote the article - I don't think it is inflamatory. It is irrelevant if 0% of business owners are Black. The US Treasury (which controls the IRS, money printing and funds the government) should not abuse its power to favor a certain segment of the population. The government should not bail out private companies.
- missedthecue 6y ago
  I feel like the "don't bail out private companies" narrative applies when doing so prevents creative destruction. When the government straight up bans most companies from doing business, with little warning, and for a prolonged and unpredictable amount of time, I think some level of nuance should be applied.
- macspoofing 6y ago
  Don't gas-light, you knew exactly what you were doing. >The government should not bail out private companies. Approximately 0 people came to that conclusion reading your blog, because you used a dishonest click-bait title at a time of racial sensitivity.

cojoke 6y ago

That site is a mobile ad nightmare. Also should the thread title mention that only 14% of PPP application respondents provided info on race?

ugwigr 6y ago
The sample size (14%) was large enough statistically. A majority of modern studies about race rely on sampling.

nickff 6y ago

According to the US Census Bureau, 9.4% of businesses were black-owned, as of 2012. According to the same report, 78% of businesses were white-owned in 2012. https://www.census.gov/newsroom/press-releases/2015/cb15-209.html https://www.census.gov/newsroom/press-releases/2015/cb15-209...

johnmaguire2013 6y ago
And 78% of businesses were white-owned as of 2012. (same source)
- nickff 6y ago
  I was updating my comment with this statistic as you were posting yours; apologies if it 'steals your thunder'.
- ewzimm 6y ago
  I think the most useful comparison would be to judge it against expenses, since not all businesses would need the same amount of loans. The closest related statistic I could find is that all minority-owned businesses generate around 3% of revenue. The loans seem to have been given out fairly evenly as intended, but the small impact of black businesses on the economy seems like a much more significant disparity. https://www.usnews.com/news/articles/2016-09-01/most-of-americas-businesses-run-by-white-men-says-census-bureau https://www.usnews.com/news/articles/2016-09-01/most-of-amer...
  - TAForObvReasons 6y ago
    So that raises its own set of interesting questions that hits at the core of the issues that the article discusses: why is it the case that 9.4% of businesses are black-owned yet only generate 3% of revenue? Are there issues with, say, obtaining a loan? Do they face challenges to growth that white-owned businesses do not? When fixated on the statistics, it's easy to forget the human questions around the disparity.
    - 6y ago

Ghjklov 6y ago

Maybe there are fewer black-owned businesses than white-owned ones.

deleted 6y ago
[deleted]
ugwigr 6y ago
In my article, I am not looking to establish intent. I am just showing what is effectively happening and therefore to make my point it does not matter at all where fewer companies are Black-owned

strombofulous 6y ago

What percentage of loans were applied for by black-owned businesses? Comparing it to population seems like a statistic that is intentionally misleading, I would guess that a lot more businesses are owned by white people than by black people (which is its own issue). I believe only around 10% of businesses are even owned by a black person, so it doesn't surprise me to see that they have a smaller piece of the PPP loan pie...

ugwigr 6y ago
if the article was claiming to show "intent" to discriminate then it would have been misleading. I wrote the article and I never claimed to show intent. I was just showing what as effectively happening and for that the diffeerences in ownership of eligible companies by race is irrelevant.

dpbriggs 6y ago

In other news, larger corporations are more white-owned, and had the resources to wrangle the PPP loans. This is a case of small businesses not having the resources to acquire the loans in the first place. Mixing in race obfuscates and distracts from the real issue here. It should have been easier for small businesses and harder for larger ones to balance the scales.

aSplash0fDerp 6y ago
We actually have a snapshot on Youtube of personal wealth channels promoting PPP and EIDL during that window. You can see exactly who was stepping up with quality information and even sort/poll by race if thats your thing. It was being promoted as free money by some and many offered solid strategies for small businesses to make the 2nd cut and skip the lines.
- dpbriggs 6y ago
  Could you elaborate? I'm not quite sure what you're trying to say. Businesses are only concerned with ethics if it improves their bottom line. 'Free' money in uncertain times is an opportunity any business will seize if it has the means to obtain it.
  - aSplash0fDerp 6y ago
    I think this is the video that piqued my interest on March 28th. The "how-tos" and "what-is-its" spread like wildfire after that day. https://m.youtube.com/watch?feature=youtu.be&v=dwuUAGpWtlo https://m.youtube.com/watch?feature=youtu.be&v=dwuUAGpWtlo We are 15 days into SIP at this point. I do not need PPP/EIDL, but as a prior SBO, I followed this topic with interest. The quality of info was high and SB's had days and sometimes weeks notice on navigating the process. I read that CVT went on to make $300k a day on YT (somedays) by providing daily updates on stimulus, PPP, EIDL, etc, so the incentive was there to get the word out. If race is a factor, you'll find it was being discussed in their circles with the same delivery as Brian on YT. If not.. They should have picked a better accountant.
6y ago

krisroadruck 6y ago

What percentage of businesses with paid employees are black owned? Without this bit of data, the rest doesn't have any context.

ugwigr 6y ago
In my opinion, it does not matter if 0.1% of companies are Black-owned. In my article, I am not looking to establish intent. I am just showing what is effectively happening and for that the percentage you asked about is irrelevant.

panzagl 6y ago

Rejection rate seems like it would be more useful than just percentage of overall acceptance.

ugwigr 6y ago
Rejection rate might give a clue to intent - but even then not really cause it would be hard to tell whether the difference in rejection is justified by other non-racial factors. I wrote the article to show the effect of the policy not the intent of the implementation and for that the metrics I used were appropriate

andrewla 6y ago

To be clear: > The full list of Paycheck Protection Program recipients released by the Small Business Administration on Monday shows that of the 14 percent of businesses that chose to identify race in their loan application, Black-owned businesses received 1.9 percent of loans while White-owned businesses received 83 percent. So the actual percentage of black-owned businesses receiving PPP loans is somewhere from 0.26% - 86.26%, depending on how you think the data is biased.

ugwigr 6y ago
majority of studies are based on sampling
- andrewla 6y ago
  You don’t understand what sampling is.
  - ugwigr 6y ago
    it is a self-selected sample - which is a sample. Ofcourse it introduces seld self-selection bias. However a vast majority of studies on race in the US rely on self reported data (for thical and legal reasons) and include some element of self selection bias. The end.

screye 6y ago

For context : Blacks own about 2.6 million businesses or 9.5 percent of all U.S. businesses The 19 million white-owned businesses have 88 percent of the overall sales, and control 86.5 percent of U.S. employment, while black businesses have a mere 1.3 percent of total American sales, and 1.7 percent of the nation’s employees. ___ The article doesn't clarify if by percent they mean number of loan applications approved or % of loan funding allocated. If it the former, then black businesses have received far fewer loans than their representative amount. If it is by revenue, then it is actually inline with the ir representation in population. ___ > Monday shows that of the 14 percent of businesses that chose to identify race in their loan application, Black-owned businesses received 1.9 percent of loans while White-owned businesses received 83 percent. Might be interesting to see if this trend held when black owners did not identify themselves.

ugwigr 6y ago
The percentages you mentioned would be relevant if I, the author, was look to show intent to discriminate but I was not. I am just showing the effect of the program and for that the percentages you mentioned are entirely irrelevant. The sample size (14%) was large enough statistically. Might also be interesting to see if this trend was larger when white owners did not identify themselves.

ugwigr 6y ago

I am the author of article. looking at difference in ownership of companies more broadly would be useful to establish intent to discriminate but that is NOT what the article claims to show. I simply show what is effectively happening and for that the stats on ownership of eliegible companies by race are irrelevant.