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Minority Depository Institutions: Paycheck Protection Program (PPP) Lending Insights

AUTHORS:

Anthony Barr, Research and Impact Director
National Bankers Association Foundation

Carl Romer, Research Manager 
National Bankers Association Foundation
Figure 4 AAPI, Black, and Hispanic MDIs each issued a greater share of their PPP lending t

Description

In response to the COVID-19 pandemic in March 2020, Congress Passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to buttress the economy. Integral to this act was the Paycheck Protection Program (PPP), which helped businesses, self-employed workers, sole proprietors, and nonprofit organizations to continue paying salaries. Businesses could not operate under stay at home orders, and without this infusion of capital, many would have shuttered (Moreland et. al., 2020). Our analysis of the Small Business Administration‘s (SBA) publicly released microdata finds that there was a total of 11.4 million PPP loans issued, totaling $794.3 billion. Small businesses have reported retaining 89.6 million jobs, according to the Pandemic Response Accountability Committee.  

Minority depository institutions (MDIs) played an important role in supporting small businesses and their employees during this period of crisis. MDIs are mission-driven banks that provide access to credit for marginalized communities across the United States. A growing body of research establishes that MDIs originate a greater share of loans across all loan types to minority borrowers and are located in places with higher poverty rates and larger non-white populations than places served by non-MDI financial institutions, including non-MDI community banks. As detailed in this piece, our research finds that MDIs outperformed non-MDI banks in deploying PPP loans and loan dollars to minority and low-income communities.  

Download Minority Depository Institutions: Paycheck Protection Program (PPP) Lending Insights

Published August 30, 2023

The Early Bird Special ends on July 1, 2023.

Specifically, our analysis finds that: 

  • 119 MDIs collectively issued nearly 270,000 PPP loans and more than $16 billion in loan dollars. 

  • MDI participation in PPP lending was substantial across all MDI types, with 81% of Asian American or Pacific Islander (AAPI) MDIs participating, 84% of Black or African American (Black) MDIs, 84% of Hispanic or Latino (Hispanic) MDIs, and 94% of American Indian or Alaska Native (AIAN) MDIs in existence as of Q4 2021. 

  • MDIs loaned money to all 50 states, Washington, D.C., Puerto Rico, Guam, the United States Virgin Islands, American Samoa, and the Northern Mariana Islands. 

  • The median MDI PPP loan was $18,000 compared to the median non-MDI loan of $20,715. 

  • The average MDI PPP loan dollar went to a zip code that had poverty rates of 18% compared to 12.3% for non-MDI PPP loan dollars and the national poverty rate of 11%. 

  • 79% of MDI loans went to minority or LMI communities versus only 47% of non-MDI loans. 

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