New Goldman Sachs and Bipartisan Policy Center Report Shows Action Needed to Increase Small Businesses’ Access to Capital
27 Julho 2021 - 3:21PM
Business Wire
As Paycheck Protection Program funds end, small
businesses need more capital; Black-owned small businesses face
larger hurdles than their white peers in accessing capital
A new report released today by Goldman Sachs 10,000 Small
Businesses Voices in conjunction with the Bipartisan Policy Center
shows the strain small business owners across the country are
feeling as federal Paycheck Protection Program (PPP) funding is
depleted. The report offers urgently needed policy solutions to put
main street businesses back on the road to recovery.
In June, 82% of small business owners in a Goldman Sachs 10,000
Small Businesses Voices survey said their PPP funds would run out
by the end of July. Yet just 24% said they were confident they
could maintain payroll after depletion of PPP funds. Many small
businesses say they are in a precarious position: emergency
assistance is dwindling, and debt needs to be repaid—yet revenues
have not fully recovered. For those seeking new sources of credit,
pandemic disruptions are hindering their ability to secure
financing.
The report also highlights a troubling fact: Black-owned
businesses have significantly more difficulty accessing capital
than their white peers. While PPP was broadly effective in
sustaining employment at small businesses, its design reflected
underlying disparities in access to finance. Challenges faced by
Black small business owners include:
- Black-owned businesses that are low credit risks are half as
likely as white-owned firms to receive all the financing they seek,
found a 2021 Federal Reserve Banks Small Business Credit
Survey.
- And white-owned businesses are twice as likely to receive all
financing sought even when they are medium/high credit risk.
- Research also finds racial differences in the decision to
apply. Black small business owners with high credit scores are more
than twice as likely to report a fear of denial than white founders
with below median credit.
“As July comes to a close, small businesses across America face
a grim reality: their Paycheck Protection Program funding is
running dry, but our economy hasn’t fully recovered, the cost of
doing business is increasing and their debts are coming due,”
said Joe Wall, national director of the Goldman Sachs 10,000
Small Business Voices program. “Together with the Bipartisan
Policy Center, our policy recommendations will help ensure a main
street recovery continues.”
Policy actions recommended in the report include:
- Create a long-term, low-interest loan guarantee program to
provide flexible, patient credit to allow small businesses to
rebuild balance sheets as they restore revenues.
- Direct the Small Business Administration (SBA) to re-evaluate
policies regarding financial performance in previous years to
account for the impact of 2020 on small business balance
sheets.
- Make SBA subordination agreements as easy as possible regarding
Economic Injury Disaster Loans (EIDL).
- Consider actions that will expand the lender base in government
guarantee programs.
- Strengthen the capacity of CDFIs to distribute more small
business credit in their target communities.
- Prioritize small business financing as federal, state, and
local governments distribute American Rescue Plan relief
funds.
“Many American small businesses are still struggling to recover
from the pandemic. Federal relief programs were crucial in helping
them stay afloat,” said Dane Stangler, Director of Strategic
Initiatives at the Bipartisan Policy Center. “Now, new actions
are needed to help expand access to the credit they will need to
invest and create jobs for their communities.”
The full report with detailed policy recommendations for
increasing small business access to capital can be found here.
ABOUT 10,000 SMALL BUSINESSES
VOICES
Goldman Sachs 10,000 Small Businesses Voices is an initiative
for program participants to organize and advocate for policies that
matter to them. It builds on Goldman Sachs 10,000 Small Businesses,
which over the past decade has provided access to education,
capital, and support services to more than 10,000 small business
owners across all 50 states, Puerto Rico, and Washington D.C.
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Abbey Collins, Goldman Sachs, 212-902-5400
Goldman Sachs (NYSE:GS)
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