As small businesses throughout the borough are receiving minimal help from the city during the pandemic and little from the federal government, AG Letitia James has taken notice.
On May 6, James, along with 23 attorneys generals, sent a letter to Congress, in which they stressed that changes need to be made to the Paycheck Protection Program (PPP) to ensure that funds are distributed fairly and equitably to the small businesses that were the originally intended recipients of the loans. In the letter, they said that the money has been going to large businesses, leaving the small ones with the short end of the stick.
“Small businesses are the backbone of our economy, and deserve full access to the funds intended to help them,” James said. “The PPP was created to help small businesses affected by the coronavirus, including the many women- and minority-owned and operated businesses, but, instead, much of this money has gone to large corporations. We are calling on Congress to enshrine changes into the PPP to ensure these small businesses have the resources to continue and thrive on after this pandemic passes. Separately, my office has requested information from 11 big banks to determine how loan determinations were made.”
In the letter, the coalition calls for Congress to adopt the following measures before they allocate additional PPP funding:
- Increase fair access to funding for small businesses: The coalition calls for Congress to require the Small Business Administration (SBA) to provide stronger, explicit guidance to lenders to ensure that funding goes to small businesses and not large, publicly traded companies.
- Ensure equitable distribution: The coalition calls for a portion of any future funding for the program to be allocated exclusively for minority-owned small businesses, for funding to be fairly distributed across metropolitan areas, and for small banks and credit unions to be fairly represented as lending sources involved in the program.
- Better communication and transparency: The coalition urges Congress to direct the SBA to provide more direct guidance to businesses during the application process.
- More flexibility and technical support: The coalition believes that the PPP does not adequately serve small businesses and requires more flexibility.
In addition to the letter, last week, James wrote to 11 large financial institutions seeking information to establish whether they engaged in practices that may have resulted in PPP loans being awarded to larger businesses or borrowers, instead of to all eligible applicants on a first-come, first-served basis. She requested detailed information on each of these banks’ practices in marketing, issuing and servicing PPP loans and information concerning banks’ fair lending practices to determine if women or minority-owned businesses were negatively affected by the banks’ PPP loan practices.