Unequal Distribution: How Businesses in East Oakland and Other Communities of Color Missed Out on PPP Loans

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Yummy Grill, an Afghan kebab restaurant on International Boulevard, has struggled through the pandemic. Only five percent of businesses in this neighborhood who applied for a PPP loan, received one. Yummy Grill only recently received PPP funding through Lendio, a Utah-based small business specialist.
Yummy Grill, an Afghan kebab restaurant on International Boulevard, has struggled through the pandemic. After three failed attempts applying for a PPP loan through Chase Bank, it just recently received one through a Utah-based small-business specialist. (Adhiti Bandlamudi/KQED)

International Boulevard in East Oakland lives up to its name. In particular, the stretch between 42nd and 83rd avenues is home to hundreds of Mexican panaderias, Vietnamese nail salons, Black barber shops and other minority-owned businesses.

Before COVID-19 hit, this busy thoroughfare was bustling with foot traffic. But more than a year into the pandemic, almost every other shop is boarded up or closed with metal gates.

Across the United States, as the pandemic ravaged local economies, scores of small-business owners applied for forgivable Paycheck Protection Program loans, a federal initiative that injected some $700 billion into businesses as much of the economy shut down. Many often waited months to receive support as they struggled to stay afloat.

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Yet, a Reveal analysis of more than 5 million PPP loans issued during the first two rounds of funding from April through August found sweeping racial disparities in how that money was distributed, with businesses in largely white neighborhoods receiving loans at a far greater rate than those in neighborhoods with significant minority populations.

Such was the case in this stretch of East Oakland along International Boulevard, where just about 5% of businesses received PPP loans during that period, the analysis found.

Compare that to the 49% of businesses who received PPP loans in Montclair, a predominantly white neighborhood in the nearby Oakland Hills.

The loan data, which Reveal obtained after successfully suing the U.S. Small Business Administration, provides the number of loans issued per location, but does not include the number of applicants, which means the approval/denial rate in each area is unclear.

[Read more about the methodology of Reveal's analysis here.]

Therefore, the low loan rates in many communities of color may have resulted from a large percentage of businesses not applying — as opposed to having had their applications rejected.

But the results are nonetheless disturbing to equitable lending advocates, who note that under federal law, banks must meet the credit needs of the communities they operate in, income notwithstanding. And regardless of whether businesses in many Black and brown communities simply didn't apply for PPP loans or were rejected, the gaping disparities in reception rates suggest the program failed to effectively serve all communities equally, those advocates say.

Many small-business owners, particularly non-English speakers, say they struggled to navigate the complicated PPP application process or find the resources needed to help them apply.


Questionable Distribution

Farid Ahmed Bakhtary owns Yummy Grill, an Afghan kebab shop nestled between a strip mall and King Street on International Boulevard. He applied for a PPP loan through Chase Bank three different times, and was declined each time.

"We've gone through all this struggle and hardship," Bakhtary said. "Hopefully, there is a light at the end of the tunnel."

He eventually applied through Lendio, a Utah-based small-business specialist, to get his loan approved. "Some of these big banks, I think it's not helping the small businesses," Bakhtary said.

Iba Reller, a spokeswoman for Chase Bank, wouldn't speak specifically about East Oakland or Yummy Grill, but said that nationally more than 32% of her bank's PPP loans in 2020 were to small businesses in communities of color.

Similar to other once busy thoroughfares around the Bay, International Boulevard has suffered during the pandemic. After receiving little to no support from the federal government or banks, some businesses have been forced to close.
Similar to other once-busy thoroughfares in cities around the Bay Area, International Boulevard in East Oakland has suffered during the pandemic. After receiving little to no support from the federal government or banks, some businesses have been forced to close. (Adhiti Bandlamudi/KQED News)

"Our goal has always been to help as many customers — and their employees — as possible," Reller said in an email. "We proactively marketed the program specifically to minority-owned businesses, in English and in Spanish, to ensure awareness and how to apply."

Still, Reveal's analysis found that Chase Bank, one of the biggest PPP lenders, approved about 6,600 PPP loans during the first two rounds of the program in the San Francisco-Oakland-Berkeley metropolitan region (which includes San Francisco, much of the East Bay and some cities in the South Bay and North Bay). But just over 250 of those went to businesses in predominantly Latinx commercial neighborhoods and a meager 14 to those in predominantly Black neighborhoods, while almost 3,000 went to businesses in white neighborhoods.

‘We Knew There Was Going to Be a Problem’

Paulina Gonzalez-Brito, executive director of the nonprofit California Reinvestment Coalition, says she was not surprised to find communities of color struggling to land support from the federal government's PPP loan program.

"As soon as we saw the government was going to run the PPP program through the banks, we knew that there was going to be a problem for these small-business owners," she said.

Mixed neighborhoods refer to U.S. Census tracts with no racial majority.
Data provided by Reveal based on figures from the U.S. Small Business Administration, and the U.S. Census, Department of Housing and Urban Development, and Postal Service. (Chart by Adhiti Bandlamudi)

Chase Bank isn't the only bank that made a disproportionate share of its PPP loan to businesses in predominantly white neighborhoods. On the whole, Latinx and Black neighborhoods in the Bay Area received the lowest percentage of PPP loans from all major banks and credit unions, further increasing the wealth gap already widened during the pandemic.

Gonzales-Brito is also concerned with how much big banks profited during the pandemic from individual retail customers. In the last three months of 2020, 12 of America's 15 largest banks, including Chase Bank, Wells Fargo and Bank of America, each made more than $1 billion in overdraft fees. Gonzalez-Brito points out that communities of color are more likely to be affected by these fees, especially during the pandemic.

"It's the way our banks, for generations, have not worked for our communities," she said.

Editor's note: KQED is among the local businesses and media organizations that have received a Paycheck Protection Program loan. This helps us continue to provide essential information and service to our audiences during the COVID-19 pandemic.

This story was done in collaboration with the Center for Investigative Reporting's Reveal podcast. Read the original investigation, which looked at businesses in Southern California, here.

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