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WASHINGTON, D.C. – A new analysis from government watchdog Accountable.US found significant racial disparities in the awarding of loans in the Los Angeles, California area under the Trump Small Business Administration’s Paycheck Protection Program (PPP). The CARES Act program was billed as a lifeline for struggling small businesses during the COVID-19 crisis, but due to the administration’s poor design and management, Los Angeles zip codes with the highest percentage of Black residents received a smaller number of PPP loans in total and per capita.

“The Trump administration failed to support small businesses in communities of color who are disproportionately impacted by this crisis, while wealthy publicly-traded companies pocketed billions,” said Kyle Herrig, president of Accountable.US, the government watchdog which has been tracking CARES Act spending as part of its COVIDBailoutTracker.com project. “The Trump administration’s rejection of transparency and accountability sent a clear message to banks that they were free to ignore Black communities without consequence – and that’s exactly what they did. Congress needs to replace PPP with a new program that ensures resources make it to underserved communities across the country.”

KEY FINDINGS FROM THE ANALYSIS:  

  • Overall, for every 1,000 residents of Los Angeles, 17 PPP loans were awarded. However, for the top 10 zip codes with the largest nonwhite population by percentage, loans per 1,000 residents dropped to 11. Meanwhile, for the top 10 zip codes with the most white residents by percentage, it rose to 59.3 loans per 1,000 residents.
  • Primarily Black zip codes in Los Angeles fared similarly to overall nonwhite zip codes in proportions, as the ten zip codes with the highest proportion of Black residents received 11 loans per capita. 8.6-percent of Los Angeles residents were Black.
  • While some areas were left out of funding, up to $5 million in PPP funds found their way to Kanye West’s $3-billion Yeezy apparel brand; Hollywood talent agencies such as LA’s Don Buchwald and Associates, agent to Howard Stern and major television stars, received up to $1 million; and the LA Lakers received $4.6 million before returning the funds following widespread public outcry.

The disparity and favoritism seen in the Los Angeles area under the SBA’s PPP unfortunately mirrors a national trend. The localized results follow a national analysis Accountable.US conducted recently that found the 10 congressional districts with the highest percentage of Black residents received 35% less in PPP loan funds than the 10 CDs with the lowest percentage, a $21 billion gulf.

WHAT CAN BE DONE: As Congress continues to negotiate over the next major stimulus bill responding to the worsening health crisis, it is critical that lawmakers work to turn the page on the Trump administration’s poorly designed and managed PPP. Rather than repeating the mistakes, any new effort to help small businesses must be transparent, data-driven, and aligned with the needs of the communities that need help the most. LEARN MORE.

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