GoDaddy CEO: The second round of PPP loans will help smaller businesses. But more must be done

0
In fact, nearly 79% of PPP Fund distributed were for loans over $ 100,000, and more than a third of those loans were between $ 1 million and $ 5 million or more – far more than a typical micro-business owner needed to survive. One of the main obstacles for microenterprises to get loans approved was connecting with the big traditional banks which provided most of the loans.
At the end of January, more than a third of small businesses had closed in the United States compared to the previous year, according to data from Opportunity Insights Economic Tracker. And owners of minority businesses have been particularly affected. In the last quarter of 2020, the activity of minority companies decreased by 10%, compared to 6% for all small businesses.
Fortunately, some of these inequalities are corrected in the second cycle of PPP loans, which began on January 12. This time, $ 40 billion has been set aside specifically for companies with fewer than 10 employees, and the Small Business Administration has adjusted its loan process to better serve businesses owned by women, racial minorities and other under-represented groups.

The good news is that the SBA is pouring more money into more microenterprises, faster.

As of January 31, $ 20 billion had been disbursed and approval rates had increased significantly. The bad news is that with more than half of that $ 40 billion already spent, microenterprises will soon have to compete with large corporations who often have strong partnerships with the banks that oversee the approval of these loans – as we do. have seen with the first PPP distribution.

There is still a lot to do. I urge Congress to pass the Biden administration’s $ 1.9 trillion American rescue plan, which includes $ 15 billion in direct grants and $ 35 billion for lenders serving small businesses. But access to capital is not enough. Federal, state and local governments should also invest in affordable high-speed internet access, marketing and technical skills training, and wearable health benefit programs to help micro-business owners thrive.
A research effort between GoDaddy and economists and political scientists at UCLA Anderson, University of Arizona and University of Iowa to quantify the economic impact of online microenterprises, found consistent and clear results: more the online businesses – micro businesses, nonprofits, and personal websites – a community has, the more resilient and prosperous it is. Specifically, research shows that microenterprises with an active web presence have resulted in lower unemployment, greater job creation, and higher household incomes.
To realize these benefits, a little funding goes a long way. The average PPP loan for a microenterprise with less than 10 employees so far this year is about $ 28,000, compared to $ 81,000 for all other companies.
And according to our research, investments that help borrowers in underserved communities could have a particularly disproportionate economic impact. For example, black entrepreneurs who run microenterprises in parallel are 2.5 times more likely than others wanting to make their work a main source of income.

As always, timing matters. While businesses of all sizes have struggled during the pandemic, many microenterprises lack the money and savings to survive until the threat of Covid-19 subsides. And, given that we now know that these entrepreneurs are strengthening our communities and our economy, it would be tragic to miss another opportunity to give them the help they need.

Leave A Reply

Your email address will not be published.