More than two years ago, small businesses in Greater Worcester and across the country suffered a devastating and unexpected blow to their operations.
The COVID-19 pandemic has caused the temporary closure of thousands of Worcester County businesses, many of which have had to close permanently. Businesses deemed non-essential, such as restaurants and hotels, have felt the brunt of economic restrictions imposed by federal and state governments to minimize the spread of the virus.
One of the main responses from the federal government and the US Small Business Administration has been the Paycheck Protection Program. The loans were first distributed in 2020 around the start of the pandemic, with an additional cycle in 2021. Initially, 75% of the loans were to be used to pay employee salaries, but this percentage was eventually lowered to 60% to allow businesses to pay additional overhead. costs.
Overall, more than 20,000 PPP loans totaling $1.8 billion have been issued to businesses in Worcester County, of which more than $4,800 and $450 million have been issued to businesses in the city of Worcester, according to SBA data. These loans have been used to pay the salaries of more than 150,000 jobs in the county, including more than 35,000 jobs in the city of Worcester.
Alex Guardiola, Vice President, Worcester Regional Chamber of Commerce
“It shows how important it was for our economy to be able to rebound,” said Alex Guardiola, vice president of government affairs and public policy at the Worcester Regional Chamber of Commerce. “I don’t think the majority of these businesses that are open now would be open without them.”
Spread the funds
Local banks in central Massachusetts played a crucial role in ensuring businesses in the area could get the loans they needed, Guardiola said.
“Now you can imagine every company on the spectrum, regardless of industry, was trying to apply for these PPP loans. So we’ve been working really hard with our smaller community banks here in Worcester to help navigate those loans,” he said.
Banks headquartered in Worcester County and MetroWest provided the majority of loans to small businesses in the region, according to SBA data. In Worcester County, local bank lending was led by UniBank in Whitinsville with $107 million in SBA loans, followed by Cornerstone Bank in Worcester with $99 million and Webster Five in Auburn with $82 million.
Businesses identified as women-owned or minority-owned received lower amounts on average than businesses that did not identify themselves or were identified as white male-owned, according to SBA data.
“Working-class communities have been the hardest hit, while receiving one of the least in terms of financial assistance,” said Kareem Kibodya, co-chief policy officer at the Massachusetts Black Economic Council.
Kareem Kibodya of the Black Economic Council of Massachusetts
According to SBA data, businesses identified as female-owned in Worcester received an average of about $55,000, about half that of businesses identified as male-led. Black-owned businesses received an average of about $32,000, or one-third of what businesses identified as white-owned got.
Local banks did not have the same kind of close relationships with local communities of color as they did with white-owned businesses, which caused minority-owned business owners to be more reserved when asking loans, Kibodya said.
“Whether it’s historical disparities due to redlining or current issues with access to capital, if you don’t feel if you have that relationship with your local bank, or every time you go there, you feel that you’re not necessarily welcomed with open arms, you’re going to be a little hesitant to go in the future,” he said.
A List of Worcester County PPP Loans by Race
The immigrant experience
Jose Zuniga, who immigrated to the United States from Mexico and runs restaurant Auburn Tacos Mexico, was unable to secure money from the first round of PPP financing, due to the amount of paperwork involved and the timing.
“The information was not available,” Zuniga said. “Everyone applied at the same time, and it was really hard to get. It was taking a long time with my application, and when they got back to me, they told me that I hadn’t applied in time.
He eventually received funding in the second round of loans, securing $10,000. Zuniga said among other immigrant-owned businesses he spoke to, the process was more or less the same.
“At first, people weren’t ready. There was so much paperwork and things like that,” he said.
Guardiola said the SBA has put measures in place to ensure fairer distribution. Later federal government initiatives, such as the Restaurant Revitalization Fund, gave greater priority to women and minority-owned businesses.
“They would be much better prepared now to reach out to small businesses,” Guardiola said. “If there were to be another wave, there would be unforeseen events in the future.”