Dive brief:

• Senators Marco Rubio, R-FL, and Susan Collins, R-ME, presented two proposals to extend the Paycheck Protection Program (PPP) at least until the end of the year, Bloomberg noted.
• Small black-owned businesses close almost twice as fast as all small businesses combined, the Federal Reserve Bank of New York found in a study published Tuesday. Data shows a 41% drop in active black-owned small businesses between February and April, compared to an overall drop of 22%. Meanwhile, the number of active Latin business owners fell 32%, while Asian business owners fell 26% and white business owners fell 17%.
• Elsewhere, 31% of workers laid off or on leave who were reinstated on the payroll say they were laid off a second time, according to a Cornell University. investigation published Tuesday. Another 26% say their employer told them they could be made redundant again.

Dive overview:

The PPP loan application window closed on saturday unless Congress intervenes. Rubio-Collins’ proposals come about a week after Senate Republicans suggested a long-term loan initiative that allocate nearly $ 60 billion for seasonal businesses and businesses based in low income communities. The plan would also put the nearly $ 130 billion in unclaimed PPP funds back into circulation.

A proposal would extend the PPP until Dec.31, with a particular focus on companies with 300 or fewer employees that have seen their revenues drop 35% or more, according to Bloomberg. It would also fund personal protective equipment for employees.

A second plan would create a longer-term program to provide loans to hard-hit businesses and give an additional $ 10 million to the Minority Business Development Agency.

The latter would at least make an effort to address a lingering racial disparity that the New York Fed study supports. The central bank branch looked at Census Bureau data and found that counties where black-owned businesses are highly concentrated had a higher number of COVID-19 cases per 1,000 people through to completion. June.

“Areas with higher concentrations of black businesses are more likely to face larger direct (longer forced shutdowns, COVID-19 symptoms) and indirect (social distancing, fewer customers) effects of the pandemic.” , indicates the report.

About 40% of black-owned business revenue is concentrated in 30 counties, the New York Fed found. Nineteen of those 30 counties are areas with the highest concentration of COVID-19.

“The important metapoint is that you can’t take geography out of it,” Claire Kramer Mills, assistant vice president of the New York Fed, told the Wall Street Journal. “There are particular places that have been hit hard. They’ve been hit hard from a health perspective, and they’ve been hit hard from a business perspective. They are also affected by not being optimally served by one of the largest federal programs in our lives.

Non-white owned businesses have long reported being underserved by PPP. Only 12% of black and Latino business owners who applied for PPP loans said they received what they asked for, according to a survey conducted in May by the Global Strategy Group on behalf of Color of Change and UnidosUS, two equal rights organizations.

The New York Fed study cites weaker ties to financial institutions as a potential reason for the inequality of P3s.

The Cornell survey, on the other hand, illustrates another hurdle faced by P3 recipients. Bonnie Morales, co-owner of Kachka, a Russian restaurant in Portland, Ore., Said she could have to lay off up to half of her current workforce if the $ 500,000 PPP loan she received was due.

The loan, which has allowed her to rehire most of her 48 employees, “is like a band-aid besides a band-aid – it barely holds,” she said. says Bloomberg. “It’s going to fall right away in October.”

Giving businesses a second PPP loan would be “a lifeline,” Patti Husic, president and CEO of Harrisburg, Penn-based Centric Financial. Recount American banker.

A proposal lawmakers tabled last week would allow companies with up to 300 employees and a 50% drop in revenue or more to get a second PPP loan of up to $ 2 million.

But that’s not the only adjustment some in the banking space are suggesting beyond simply extending the Congress program. Paul Merski, group executive vice president for congressional relations and strategy at Independent Community Bankers of America, said he feared a move to cut set-up fees from 5% to 3% on second PPP loans mean that the demand for funds would continue to stagnate. .

“The terms barely worked in the first round of PPP with the origination fee, the interest rate and things like that,” he told American Banker. “I don’t see a strong acceptance of additional PPP loans if conditions for both borrower and lender worsen.”

Others seek to further simplify loan forgiveness requests.