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Kamala Harris' claim on COVID-19 business loans not whole truth

Craig Mauger
The Detroit News

Democratic vice presidential nominee Kamala Harris has indicated while campaigning in Michigan that only one Black-owned restaurant in the state received support through a federal COVID-19 relief program, an assertion that's not true.

The U.S. senator from California who's former Vice President Joe Biden's running mate renewed the claim about the Paycheck Protection Program on Tuesday while visiting Flint and Detroit. The program, which has been criticized for how it's treated minority-owned businesses, provided nearly $16 billion in forgivable loans for more than 120,000 Michigan entities by the end of June.

Democratic vice presidential candidate Sen. Kamala Harris, D-Calif., speaks at Headliners Barbershop in Detroit, Tuesday.

"I looked at the numbers in terms of the businesses, the small businesses, restaurants that received the benefit of the PPP in Michigan and only one Black restaurant received it of the hundreds of others that received it," Harris told a reporter for WDIV. "So Joe and I feel very strongly that you have to speak truth, you cannot deny fact and where there are disparities, they need to be addressed."

While there is evidence of racial disparities among those receiving PPP loans, the claim by Harris is based on a small portion of data and doesn't tell the whole story.

Of the 792 Michigan full-service restaurants that received at least $150,000 in loans through the program, only one reported its owners were Black or African American, according to U.S. Small Business Administration data.

But 617 of the full-service restaurants, or 78%, didn't answer the question about the race or ethnicity of their owners.

In addition, two Michigan fast food and carryout restaurants — a different classification from full-service restaurants — that are Black or African American owned received PPP loans of more than $150,000, according to the federal data. And 26 other Black or African American owned restaurants in Michigan received PPP loans of less than  $150,000, according to federal data.

Still, much of the demographic information about owners remains unclear because 81% of the more than 6,700 restaurants in Michigan that received PPP loans didn't answer the race or ethnicity question.

"Sen. Harris is making the important point that during COVID-19 Black communities and small businesses have been disproportionately impacted –– including Black people dying at two times the rate," Biden campaign spokesman Ben Halle said of the Harris statement.

About 75% of the PPP loans didn't include any demographic information at the time of the loan application, according to the Small Business Administration.

"The loan forgiveness application expressly requests demographic information for borrowers so that SBA can better understand which small businesses are benefiting from PPP loans," the administration added in a document on its website.

Still, multiple studies have found evidence of disparities in how Black-owned businesses were handled in the business loan process.

The National Community Reinvestment Coalition, an organization that works to promote investment in underserved communities, said in July the federal government's data was "so flawed it is virtually useless to assess if there was any bias in how the money was distributed or how much money went to specific communities."

The coalition sent "matched pairs" of Black individuals and white individuals into banks while PPP loans were available to see if there were differences in their treatment. The analysis found that in 27 out of 63 "tests," there was a difference in treatment with the white tester receiving more favorable treatment as compared with the Black tester.

cmauger@detroitnews.com