The federal government wants a more equitable distribution of its COVID-19 relief funds for employers, President Joe Biden’s small business chief said.
The U.S. Small Business Administration will give preference for grants and loans to micro businesses and those owned by women, veterans, members of minority groups or located in poor neighborhoods – as the agency has done since Biden took office on Jan. 20.
"Millions of underserved businesses -- particularly our smallest businesses and those owned by women and people of color -- were left out of early rounds of relief," agency administrator Isabella Casillas Guzman said on Tuesday, referring to the Paycheck Protection Program begun in April 2020.
"I'm proud of the work we did to begin to rectify these inequities: In 2021, 96% of PPP loans went to small businesses with fewer than 20 employees," she said. "Moving forward, we will continue to prioritize equity in all SBA’s programs and services."
The PPP, which consists of bank loans guaranteed by the federal government, has stopped taking applications.
On Long Island, law offices, accounting firms and other similar professional offices received more than twice as many PPP loans in the program's first two rounds as did hard-hit restaurants and hotels, according to a Newsday analysis of federal loan data from April 3 to June 30, 2020.
The professional, scientific and technical services industry, which includes lawyers and accountants, topped the list of PPP loans made in Nassau and Suffolk counties during the period, with 9,515 loans, or 15% of the 65,426 loans in the four congressional districts that encompass most of the Island. In contrast, the accommodation and food services industry, which includes hotels, motels, restaurants, bars and delis, received 4,078 loans, or 6%, the analysis shows.
In the PPP's first two weeks in April 2020, the beneficiaries were long-established businesses and nonprofits, including Long Island's largest law firm Rivkin Radler LLP in Uniondale, the law firm Certilman Balin Adler & Hyman in East Meadow, the Peterbilt trucking company in Ronkonkoma and the Baiting Hollow Golf Club. Newsday received a $10 million loan in the period.
The Biden administration’s equity drive is being challenged in court and on Capitol Hill because another SBA program – the Restaurant Revitalization Fund, or RRF – ran out of money in its first two weeks, when only applications from underserved businesses were being approved. That prioritization was mandated by Congress.
The RRF was allocated $28.6 billion but the applications received so far total more than $69 billion.
Last week, a federal Circuit Court of Appeals in Cincinnati, Ohio, barred SBA from giving preference to minority- and women-owned restaurants for RRF grants. Two of the three judges accused the agency of "racial gerrymandering" and using "unconstitutional criteria."
SBA, through spokesman Matt Coleman, declined to comment on the case on Wednesday.
The circuit court decision overturned a May 19 ruling by a federal district judge in Tennessee, which denied the request of a white male restaurateur that SBA stop putting underserved businesses at the head of the line for the RRF.
Twelve Republican members of the House Small Business Committee, including Rep. Andrew Garbarino of Bay Shore, have called on SBA to ensure "the assistance to these [restaurants] must not discriminate."
In a May 20 letter to the SBA chief, the House members wrote, "The federal government [is] picking winners and losers. This is not the American way."