PPP lending provided overwhelming assistance to minority- and women-owned small businesses
December 15, 2020 — NEW YORK —Today, TruFund Financial Services, Inc. released its Paycheck Protection Program Impact Report. This report provides a comprehensive summary of TruFund’s penetration and outreach efforts to minority- and women-owned small businesses to deploy the Small Business Administration’s Paycheck Protection Program (PPP).
PPP dollars have played a crucial role in TruFund’s COVID-19 pandemic response efforts. The PPP provided significant federal funds as temporary relief to small businesses, with 1 percent interest rate loans of up to $10 million that are up to 100 percent forgivable. Across two rounds of funding, $659 billion has been allocated by the federal government for PPP financing. Despite these favorable rates and terms, early data indicates that African American and other minority businesses have been underserved.
However, through the efforts of TruFund—a Community Development Financial Institution (CDFI) dedicated to creating successful and resilient small businesses for disadvantaged individuals and communities—many underserved small businesses were provided the resources and support they needed to continue serving their constituents. A total of 87 percent of TruFund’s PPP loan dollars went to minority small business—62 percent have been distributed to African American-owned small businesses, 24 percent have gone to Latino/Hispanic-owned businesses, and 38 percent of loan funding went to women-owned businesses.
“COVID-19 has inflicted devastation across the U.S., with people of color and minority groups affected the most,” said TruFund’s President and CEO James H. Bason. “In these unparalleled times, it’s imperative that we provide the small businesses we serve with the resources they need to continue serving their communities. We are thankful for the opportunity to supply funding to our minority- and women-owned small business clients through the Small Business Administration’s Paycheck Protection Program. Our efforts offered TruFund’s small-business clients the critical financial support they needed to pull through this pandemic and fostered economic strength in our market areas of Alabama, New York, Louisiana, and Texas.”
When disasters strike, they wreak havoc and leave chaos, with small businesses experiencing the greatest losses and impact. According to research from the Federal Emergency Management Agency (FEMA), 40 to 60 percent of small businesses never reopen after a disaster, and 90 percent of small companies fail within one year if they can’t reopen within five days of a disaster. From crushing catastrophes such as hurricanes, wildfires, and pandemics, to minor ones like a burst pipe or temporary loss of power, small businesses are particularly vulnerable and sometimes unprepared for the impact of disasters. Small businesses owned and operated by minorities are disproportionately more affected. A paper written by the National Bureau of Economic Research indicates that in areas badly hit by natural disaster, whites experienced an average wealth increase of $126,000 after recovery efforts are accounted for, while African Americans saw a wealth decrease of $27,000. This trend has continued during the COVID-19 pandemic—from the start of the pandemic in February 2020 until April, a total of 41 percent of African American-owned businesses closed nationwide, compared to 17 percent of white-owned businesses.
As a CDFI, TruFund Financial was specifically designated funds during the second distribution of PPP loans and was uniquely positioned to provide loan services and other pandemic-related assistance to small businesses struggling to stay in operation during COVID-19. Since its founding in 2005, TruFund has provided disaster recovery and resiliency support to address the needs of small businesses and nonprofits throughout all phases of disasters. In the last 15 years, TruFund has provided grants and loans to small businesses and nonprofits for disaster recovery. Additionally, TruFund has served small businesses with disaster-related individual- and group-business training.
Though TruFund has been dedicated to small business disaster assistance since its inception in 2005, there was no formal business unit. This year, during the COVID-19 pandemic, TruFund officially established a disaster recovery and resiliency unit. Because of TruFund’s years of experience in disaster aid, this unit was prepared and equipped to provide urgent assistance to TruFund’s small-business partners to counteract the devasting damage caused by COVID-19.
“TruFund Financial Services, Inc. is an organization birthed out of disaster response,” said Myla R. Poree, TruFund’s vice president, director of disaster recovery and resiliency. “In the years we’ve been in operation, one of our main focuses has been to support our minority-owned small-business partners before, during, and after disasters strike. We’re dedicated to ensuring that our clients have all the resources they need to maintain resiliency and stability in times of crisis. The information found in the Paycheck Protection Program Impact Report reflects the power of TruFund’s Disaster Recovery and Resiliency Unit and our ability to help our small business clients through the unpredictable challenges of disasters.”
Through the Paycheck Protection Program, TruFund provided immediate financial and technical support to its small-business partners. TruFund also helped its clients retain thousands of employees and pivot their business models to accommodate COVID-19 safety guidelines. TruFund PPP loan funding supported nonprofits such as Youth Action YouthBuild (YAYB) in Harlem, New York, an organization that provides job skills training and job placement services to young adults. The PPP loan YAYB received through TruFund helped the organization continue serving its community and prevented layoffs after losing public funding due to the pandemic. “The PPP loan secured through TruFund allowed our agency to maintain operations during the COVID-19 pandemic,” said YAYB Executive Director Robert Taylor. “It came at a time when committed public funds were unexpectedly withdrawn and we were facing the possibility of staff reductions and service cuts. With our secured PPP loan, we have been able to stay fully staffed and continue to provide a full roster of services to our students.”
Read TruFund’s full Paycheck Protection Program Impact Report .
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Media Contact: Kim Carter Evans, kevans@trufund.org, 646-385-6946
About TruFund Financial Services, Inc.
TruFund Financial Services, Inc. is a wholly independent national nonprofit Community Development Financial Institution (CDFI). TruFund seeks to stimulate economic development in communities that are underserved by traditional banking institutions by providing fair and accessible capital, hands-on technical assistance, and innovative solutions to small businesses and nonprofit organization.
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