HILLSIDE, Ill. – State Rep. Emanuel “Chris” Welch, D-Hillside, is calling on big banks like Chase Bank and Bank of America to end restrictive implementation of the newly created federal Paycheck Protection Program (PPP) that aims to offer payroll assistance to small businesses facing hardship during the COVID-19 pandemic.
“The restrictive lending policies of big banks are stopping small businesses from receiving PPP funding. This was not designed to be a handout to banks that allows them to pick and choose recipients—it’s meant to provide immediate assistance to small businesses, so they can keep playing their employees,” Welch said. “I’m encouraging folks to boycott big banks until they remove their restrictive policies that keep these funds from small businesses—especially small businesses of color.”
According to the U.S. Small Business Administration (SBA), the Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
Many small businesses owners are being excluded from funding because of limits set by lenders facing high demand. One of these limiting factors is having a pre-existing relationship with a bank. A 2016 study by economists at the Stanford Institute for Economic Policy Research found that first year black businesses are 7 times less likely to receive a bank loan that white businesses and twice less likely to use business credit cards.
Local business Sha-Poppin Gourmet Popcorn in Westchester has run into this problem receiving PPP funding. Owner Stacy Armstrong initially met with a big bank but because they are prioritizing existing customers, she got turned down repeatedly with “error messages.” Eventually, she was able to apply for a loan at a local credit union—although for a lower sum.
“Until our communities’ small businesses receive the assistance from big banks that we deserve, I’m encouraging residents to take their business to local community banks and credit unions,” Welch said. “It seems that time and time again black and brown-owned businesses are an afterthought. Enough is enough, and our community deserves better.”
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