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Black-owned bank executive cites lack of documentation as barrier to PPP loans

Updated: Sep 24, 2020

An executive at one of the nation's largest Black-owned banks shared some insights on

why some small businesses struggled to gain access to Paycheck Protection Program loans.

Teri Williams, president and COO of Boston-based OneUnited Bank, said her institution

received a large number of PPP applications from South Florida businesses. OneUnited has a

branch in Miami, its only location in Florida. "We had more applications from Florida than

Massachusetts," Williams said. "I think it's because Miami is home to so many startups and

smaller businesses. In Massachusetts, a lot of people work for bigger corporations."

The $656 million asset bank began accepting PPP applications during the program's second

round. The average loan was $50,000, Williams said. Although the application deadline for the federal program was extended to Aug. 8, the bank stopped accepting applications

June 30.

Williams said many of the businesses that qualified for the program had already

applied by the end of June. OneUnited continued to receive applications through

June 30, but the quality of the applications degraded with time. "We started to see a lot of businesses that didn't qualify, or didn't have the documents required to apply for a loan," she said.

The documentation issue was a major barrier for small businesses, particularly

micro-businesses with fewer than 10 employees, Williams said. Many applications

the bank received were missing tax returns, payroll information and other key

documents needed for approval. In some cases, the smallest businesses were

never able to gather the required paperwork, even after consulting with the bank.

Williams suspects many small businesses, including Black-owned enterprises, were

never approved for a PPP loan because they didn't have the documents to support

an application. That could contribute to reports that say minority-owned

businesses are less likely to receive a loan, she added.

"A lot of these really small businesses are great at the front end, they know how to

make money and serve customers, but they're not as strong with back-office

operations like accounting and keeping track of paperwork," she said.

That challenge existed prior to Covid-19. But the PPP application process amplified

the issue, Williams added.

Surveys and anecdotal reports indicate minority-owned businesses received fewer

PPP loans than their white-owned counterparts.

In one mid-May survey from Global Strategy Group, only 12% of Black and Hispanic

businesses received a loan even though 51% had applied. Meanwhile, 41% said they

had been rejected for a loan.

The SBA recently said it is legally unable to require applicants to submit

demographic data as part of the $659 billion forgivable loan program, making it

difficult to determine whether Black, Hispanic, Asian, Native American and women-owned

companies are being shut out from loans.

Lia Yaffar, interim director of the Community Fund of North Miami Dade, agreed

with Williams assessment that collecting documents was a big challenge for small


"It showed us there's a need [to provide] a higher level of structured assistance to

those business owners," she said.

The Community Fund of North Miami-Dade is a community development financial

institution, which offers financial services in low income or underserved markets.

The fund is affiliated with the Opa-locka Community Development Corporation.

Miami has more minority-owned businesses than any U.S. metro aside from San

Jose, California, according to the FIU Metropolitan Center. Thirty-seven percent of

Miami businesses are minority-owned, compared to 18% in the U.S., the center


Like many small banks, Williams said OneUnited won new clients through the PPP

process. But she added the Black Lives Matter movement brought more new

customers to the bank. Branches have been "packed" with people lining up to open

accounts in recent months.

"I think customers are reacting to the national conversation about racism and

seeking us out," said Williams, adding that the growth in new accounts is not tied

to any specific marketing strategy. "I think a lot of people want the comfort of

banking with a Black-owned institution right now.

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