More than one black-owned restaurant in Michigan received PPP loan

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This is part of a series of fact-checks the Detroit Free Press performs on public issues in conjunction with PolitiFact, a national nonprofit news organization. Suggest a fact check here.

Claim: “Only One” Black Owned Restaurant in Michigan Received Paycheck Protection Loan

During her campaign in Flint and Detroit, vice presidential candidate Kamala Harris stressed the importance of ensuring a high turnout among black voters to help elect Democratic presidential candidate Joe Biden.

In a September 22 interview with WDIV television channel, the US Senator from California spoke of the racial disparities revealed by the coronavirus pandemic and the economic recession that followed, which particularly affected black-owned businesses. .

“I looked at the numbers in terms of restaurants that have benefited from the P3 in Michigan, and only one black restaurant has received it out of the hundreds of others that have received it,” Harris said.

“You cannot deny the facts, and when there are disparities, they must be corrected,” she said.

Researchers say black-owned businesses have been hit hard during the current recession and have faced barriers in accessing help under the Paycheck Protection Program, a federal payroll relief program. coronavirus which offers low-interest loans to businesses to help them cover salaries and expenses such as rent or mortgage payments.

But Harris’ assertion about the numbers is incorrect. It is based on outdated and incomplete data. More recent data shows that at least 29 black-owned restaurants in Michigan have received P3 loans.

What the data on PPP loans show

The campaign shared a July 16 article published by the Detroit Free Press in support of Harris’ claim. He reported that of the 785 Michigan restaurants that received a P3 loan greater than $ 150,000, only one was listed as black-owned. This was according to an analysis of Small Business Administration PPP loan data.

The article did not include the number of black-owned restaurants in Michigan that received a loan of less than $ 150,000, and it noted that many P3 recipients did not report racial demographic information.

The latest data shows that the number of black-owned restaurants receiving PPP loans of any size has increased since this analysis was conducted, although it still lags behind the number of white-owned restaurants.

The updated data shows that of the 6,778 Michigan restaurants that received a P3 loan as of August 8, only 1,265, or about 19%, released racial demographics. Of these, three black-owned restaurants received loans over $ 150,000, compared with 223 white-owned restaurants, and 26 black-owned restaurants received loans under $ 150,000, compared with 804 black-owned restaurants. to whites.

So, among Michigan restaurants that received a PPP loan and reported racial information, about 2% were black and about 81% were white.

Most recipients did not report racial demographic information. That alone makes it impossible to say for sure, as Harris did, how many black-owned restaurants have benefited from the program.

Following: Senator Harris tells residents of Detroit: Elections will determine nation’s future for years to come

Following: Black entrepreneurs in Detroit at high risk after pandemic

Black-owned businesses hit hard by the COVID-19 recession

Black-owned businesses have been hit hard by the coronavirus-induced economic recession, and black-owned businesses have faced barriers in accessing PPP loans. Among all types of businesses, those with black owners were twice as likely to close during the pandemic, according to a recent report from the Federal Reserve Bank of New York.

“These companies had weaker financial cushions, weaker banking relationships and pre-existing funding gaps before the pandemic,” said Claire Kramer Mills, assistant vice president of the New York Fed. “COVID-19 has exacerbated these problems, and businesses in hardest-hit communities have experienced huge disparities in access to federal relief funds and a higher rate of business closures. “

Although the study found that businesses located in counties most affected by black business closures received PPP loans at a rate similar to that of businesses nationwide, there was significant variation between counties. In Wayne County, for example, only 11.6% of businesses received P3s loans, compared to 17.7% of businesses nationwide.

Researchers have identified other racial disparities in access to P3 loans.

Research by the National Community Reinvestment Coalition, an association of community organizations advocating for equity in the banking industry, found evidence of lending discrimination based on the race of the PPP loan applicant.

Small businesses in predominantly white neighborhoods received P3 loans faster than in predominantly black neighborhoods, according to a report by the non-partisan Brookings think tank that examined the most recent lending data.

Black-owned businesses tend to lack strong relationships with banks, especially the traditional banks that were initially relied on to provide PPP loans, and have entered the current recession in a weaker financial position, which explains why the high rate of black-owned business closures and barriers to ownership.

“Senator Harris highlights the important fact that during COVID-19, black communities and small businesses were disproportionately affected,” Ben Halle, Michigan communications director for the Biden-Harris campaign, wrote in an e- mail to PolitiFact Michigan.

Our decision

Harris said that only one black-owned restaurant in Michigan received a P3 loan.

His claim was based on old data and only involved restaurant owners who reported racial demographics and received loans over $ 150,000.

According to the most recent data from the SBA, at least 29 self-identified black-owned restaurants in Michigan have received a P3 loan, far fewer than the number of white-owned restaurants. And there is further evidence of racial disparities in access to P3 loans nationwide. But most Michigan loan seekers did not provide racial data, making it impossible to determine how many black-owned restaurants in the state have benefited from the program.

Harris’ claim contains an element of truth, but ignores critical facts that might give a different impression. We assess this claim primarily as false.

This fact check is available on the FactChat #Chatbot on the IFCN 2020 US Election on WhatsApp. Click here to find out more. Clara Hendrickson checks Michigan facts and politics as a member of the corps with Report for America, an initiative of the GroundTruth Project. Contact Clara at [email protected] or 313-296-5743 for comments or to suggest a fact check.

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