As of last week, the federal government has provided more than $500 billion in loans to small businesses through the Paycheck Protection Program.
Still, many small business owners say they’ve experienced challenges navigating through the process.
Now, a new report from the Small Business Administration’s inspector general confirmed what many small business owners already suspected — lenders have not been distributing funds as intended.
“Because SBA did not provide guidance to lenders about prioritizing borrowers in underserved and rural markets, these borrowers, including rural, minority and women-owned businesses may not have received loans as intended,” SBA Inspector General Hannibal “Mike” Ware wrote in the report.
Ware went on to add that the agency should start collecting demographic information in order to get a clearer understanding of who is being served by the program.
Other watchdog organizations say even more could be done.
On Thursday’s edition of “Closer Look,” Yasmin Farahi, senior policy counsel Center for Responsible Lending, shared her organization’s recommendations for improving the program, such as adjusting PPP rules and creating an alternative to PPP that is more accessible for small businesses.
“Basically, businesses that are more resourced were advantaged by the structure of the program in lots of ways,” Farahi told “Closer Look” host Rose Scott. “So, larger payrolls, having existing relationships with financial institutions and commercial lenders, all of these are huge advantages.”
Even with these recommendations, Farahi said many small businesses will likely still suffer in the long-term.
“What’s already happened in the first round — those who lost out, they suffered damage, that’s already done,” said Farahi. “… And so we, of course, want to see changes moving forward, and we do have recommendations about the change of fee structure that could help that.”
To listen to the full conversation, click on the audio player above.