Earlier this week, a national group called the Small Business Majority released criticism on the equity of the Paycheck Protection Program’s (PPP) response to the coronavirus economic impact.


The Arkansas Delegation offered its response Thursday evening, saying although the PPP had "shortcomings" it has provided more than 36,000 PPP loans totaling over $3.3 billion. The program is also known as the Payroll Protection Program and now commonly known as PPP.


John Arensmeyer, founder and CEO at the Washington, D.C.-based Small Business Majority group, offered the criticisms Tuesday after the Transparency and Oversight of COVID-19 Small Business Assistance Act was blocked from advancing in the U.S. Senate. The act would have required the U.S. Small Business Administration (SBA) to provide Congress and the public with timely data on the agency’s COVID-19 small business relief programs.


"For the past month questions of equity have plagued the Payroll Protection Program (PPP)," Arensmeyer stated. "First, banks favored larger firms with previous banking relationships, then over a billion dollars intended for small businesses ended in the hands of 300 publicly traded companies, and now reports indicate that certain minority populations are not being approved for PPP at the same rate as other applicants."


Arensemeyer called the block a "setback for women and minority entrepreneurs," and called on the SBA to "do the right thing and move forward with releasing this important information on a rolling basis — whether it is compelled by Congress or not."


"For America’s small business community to have a shot at a full recovery, funding must be distributed equitably," Arensemeyer added. "The Senate had a chance to adjust course and set PPP on the path to equity by voting to advance legislation to require the SBA to provide a breakdown of where funding was allocated by geography, demographics and industry. Instead, Republican Senators blocked the measure."


Despite representing the fastest growing populations of business owners, women and minority entrepreneurs are approved for small business lending at a significantly lower rate, the Small Business Majority group states. Women-owned businesses receive just 4.4% of all conventional small business loans and minority-owned firms received a scant 5.5%. Additionally, people of color are three times more likely to get denied a loan than non-minority businesses.


Locally, Over $1 billion in loans that could be forgivable were approved through two area banks in the first week of the Small Business Administration’s Paycheck Protection Program.


Over $102 million was approved through First National Bank of Fort Smith by mid-April, less than two weeks after it was rolled out. There was another $2 million waiting to be approved at the time. In all, First National received about 750 applications totaling about $104 million.


Arvest’s regional president said in mid-April they had suspended acceptance of new applications to the program but throughout their network of banks they had approved about $1 billion in Paycheck Protection Program loans. Arvest has banks in Arkansas, Oklahoma, Kansas and Missouri.


"Despite some shortcomings, PPP has helped small businesses in Arkansas — more than 36,000 PPP loans totaling over $3.3 billion have been administered," the Arkansas Delegation told the Times Record in a group response. "Congress specifically carved out $60 billion for small lenders — and that does not preclude them from using the regular pot of funding as well. Small lenders have approved nearly 950,000 loans totaling around $58.2 billion. Congress will conduct aggressive oversight to ensure loans are repaid if criteria aren’t met. If small businesses need help with PPP or the other emergency funding programs i.e. EIDL, small business debt relief, they should contact our offices."


While Small Business Majority was offering its criticisms this week, Slate published a business article that offers the possibility that the Paycheck Protection Program favored "red states" and named Arkansas, Alabama, Nebraska and Texas as getting more help than New York.


"This week, the Federal Reserve Bank of New York published a study showing that "businesses were more likely to get loans in states with stronger community banking sectors, because small and medium financial institutions have quietly dominated the program. Those states have not necessarily had the most COVID-19 cases," the Slate article noted. "They do, however, tend to be more rural and red."


Axios also put out a report this week saying small hospitals going through bankruptcy are suing the Small Business Administration, arguing it is unlawful for the federal government to deny them loans under the Paycheck Protection Program.