Small Business Relief Lending Trends: Online & Traditional Banks

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According to new research, Black business owners are more likely to receive Paycheck Protection Program loans from online lenders, rather than from banks. Racial Bias still skews applicants in traditional systems, and the studies found that this problem was also more prevalent in smaller banks than in bigger financial institutions. The majority of Black borrowers who received aid from the relief program got their loan from a financial technology company aka “fintechs”, not a bank – and the slant towards these fintechs was much higher for Black borrowers than for any other racial group. What the big banks and the fintechs had in common was automation, which removes some of the opportunities to subject applicants to discrimination. More on this study and what this all might mean going forward can be found here.