As Congress neared a $450 billion deal for small businesses, hospitals and coronavirus testing, many struggling entrepreneurs hoped they wouldn’t see a repeat of inequities that existed with the rollout of the Paycheck Protection Program (PPP).

The federal loan initiative ran out of money less than two weeks after it was announced, and after processing loans for only 5% of small businesses impacted by the coronavirus. In addition, large restaurant chains such as Ruth’s Chris Steakhouse and Potbelly received a total of $30 million in loans because they had no more than 500 workers at any single location.

One chain, Shake Shack, said it would return the $10 million stimulus loan it received.

The Defender asked Congresswoman Sheila Jackson Lee and Congressman Al Green about the PPP inequities.

Defender: Looking back, what are your thoughts on how the PPP funds were distributed? 

Jackson Lee: It is unfortunate that the businesses this program was intended to help during this economic disaster, caused through no fault of their own, did not receive any funding to keep their business and employees whole during this difficult time. This is especially troubling for minority businesses who already have a difficult time accessing funding under normal circumstances.  I call upon all well-established businesses who received funding, but can weather this storm, to do like the Shake Shack restaurant and return the funds back to the government to be disbursed to small businesses who have a greater need for funds.

Green: I have been concerned that PPP distribution would compound existing inequities in our financial system, wherein larger businesses are better positioned to take advantage of the PPP. I wrote to Speaker [Nancy] Pelosi on April 1 requesting more protections for minority-owned businesses and their employees.  I am gratified that the speaker’s proposal for the next COVID-19 relief bill channels $60 billion of PPP funding through community-based financial institutions, such as Unity Bank, with a track record of lending to low- to moderate-income communities. I am grateful for Speaker Pelosi’s insistence that the next relief package benefit underbanked small businesses and others struggling to access the PPP.

What steps are being taken in upcoming small business assistance legislation to prevent inequities from occurring again?

Jackson Lee: I have advocated and fought for funding for the self-employed, independent contractors, sole proprietors, faith institutions and non-profits.  We were able to secure $250 billion dollars, plus $60 billion for very small businesses, totaling $310 billion dollars.  We also got $25 billion dollars for testing.  I have also advocated for increasing the role of mission-based lenders, such as community banks, community development financial institutions, and SBA microloan intermediaries. By setting aside funding for these institutions, the program will be able to reach small businesses regardless of their prior banking status. We must increase the guardrails, promote transparency, and expand opportunities for the most underserved small businesses.

Green: On April 10, I introduced H.R. 6475 and 6476, amending the CARES Act to ensure equitable access to PPP loans by expediting the delivery of these emergency funds to smaller businesses, their employees, and the self-employed. These bills build upon H.R. 6380, 6381, and 6382, which I introduced on March 24. Together, H.R. 6380 and 6381 shore up small banks. H.R. 6382 would ensure that civil rights advocates and the U.S. Department of Housing and Urban Development (HUD) have the resources they need to protect vulnerable communities. The CARES Act contains provisions that embrace H.R. 6380 and 6382.