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Amherst, Massachusetts – Lending to small businesses in Massachusetts peaked in the first year of the pandemic, but to low- and middle-income earners and people of color who make up the majority of Census tracts It wasn’t. Donahue Institute, University of Massachusetts.
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Overall, Community Reinvestment Act data shows that lenders made 194,025 small business loans in Massachusetts in 2020. About 35.4% of the loans went to companies with annual revenues of $1 million or less. The number of CRA loans he has gradually increased since 2009 and reached a new peak in 2020. About 28,000 loans were issued compared to 2019 when the pandemic hit. This is largely due to the Paycheck Protection Program, which is a loan backed by the Small Business Administration that helps businesses. Keep employees employed during the COVID-19 crisis.
Compared to 2019, the 2020 CRA data show some changes in the number of regions that received loans. Overall loan numbers increased. But lending to low- and middle-income people and the majority of people in census tracts did not increase proportionately. Middle- to high-income or majority-white regions received more loans this year than they did last year as a whole, and a proportionately higher share of loans issued.
Carrie Bernstein, Research Manager and State Data Center Manager at UMass Donahue, said: Institute.
One factor behind this disparity is differences in access to banking services. According to an August 2020 Federal Reserve report, most black business owners do not have existing banking relationships, which complicates applying for these loans and securing them once the applications are submitted. I’m here. Even with access to banks, their ability to secure Paycheck Protection Program loans for their customers varies widely, with some banks applying to the federal government until just before funds are exhausted in the first round. This undermined PPP loans as a source of aid to communities of color. At the moment, we’re seeing a very high rate of business closures, and even more so for owners of color. It shows a 22% decline in the number of active business owners from February to April,” noting that black-owned businesses closed at nearly twice the rate of all small businesses (41 percent nationwide). The report also found that Hispanic and Asian companies closed at above-average rates (32% and 26%, respectively), while white companies closed at below-average rates (17%). also mentions These data points show that despite the large amount of funds made available to businesses in his first year of COVID, the funds often do not reach the communities and businesses that need them most. suggests that This disparity, or the closures that occurred before the lending program was launched, or both, may have reduced the number of loans to his POC and low- or middle-income areas in the majority of the 2020 CRA dataset.
Using CRA data on the number of loans issued, American Express has been the most active lender in Massachusetts over the past decade issuing small loans to existing Amex credit cardholders. But Bank of America financed him more than three times the dollar of American Express in Massachusetts. Together, Bank of America and Citizens Bank accounted for just over 20% of all loans issued in Massachusetts in 2020. These two banks rank second and third respectively in loan volume, behind American Express. The rest of the top 10 lenders by loan volume are Eastern, JP Morgan Chase, Lake Forest Bank & Trust, Rockland Trust, Capital One Bank and TD Bank.
In 2020, Eastern Bank and Rockland Trust were the most active CRA small business lenders headquartered here in Massachusetts. In total, these two lenders gave him over 15,846 loans in 2020. This is almost triple the amount issued in 2019 due to the Paycheck Protection Program. A local financial institution increased the amount of his loan in 2020. There were 13 Massachusetts-based lenders that issued more than 1,000 small business loans in 2020, compared with just two in 2019, according to the report. Cape Cod Five, Enterprise Bank, Berkshire Bank, Avidia Bank, Middlesex Savings, and Westfield Bank are Massachusetts-based institutions that rank among the top 25 small business lenders overall in the state .
About Massachusetts Community & Banking Council
The Massachusetts Community & Banking Council (MCBC) was founded in 1990 to bring together community organizations and financial institutions to promote credit and financial services throughout the Commonwealth by encouraging community investment in low- and middle-income communities and communities. has made a positive difference in the availability of color. MCBC is funded through the financial support of its member financial institutions, and its Board of Directors is made up of equal numbers of representatives from major community organizations and financial institutions.
About UMass Donahue Institute
Founded in 1971, UMass Donahue Institute is the public service, research, and economic development arm of the University of Massachusetts. Its mission is to apply theory and innovation to solve real-world challenges, enabling clients to achieve their goals and aspirations. The institute serves public, nonprofit, and private sector clients within the Commonwealth and nationally and globally. For more information, please visit www.donahue.umass.edu.
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