Neustadter: Small business aid perpetuates economic inequality

Corinne Neustadter

Editor’s Note: All opinion section content reflects the views of the individual author only and does not represent a stance taken by The Collegian or its editorial board.

As the COVID-19 global pandemic continues, businesses across Colorado and across the country continue to feel its economic consequences. Just recently, College Avenue Magazine published a feature on Fort Collins’ own Rollerland Skate Center, revealing the dire impacts that the coronavirus continues to have on small businesses that can no longer operate.


To help small businesses, the federal government allocated forgivable business loans into the landmark CARES Act. According to the Department of the Treasury, $349 billion was allocated towards the Paycheck Protection Program, which covers small businesses’ payroll costs for up to eight weeks. Additional funds were also directed toward loan advances, express loans and debt relief.

If Congress really wants to help small businesses, they need to address the inherent inequalities of America’s banking system to ensure that those who need aid receive it.”

However, funds for these programs ran out in just two weeks, leaving many small business owners without any safety nets. At the same time, companies including Shake Shack, Potbelly and the Los Angeles Lakers received millions in funding, despite their millions of dollars in profits; the companies returned the fees after backlash. 

Though plans are in the works for another refresh of the small business fund, the failure of the CARES Act’s small business stimulus speaks volumes about America’s structural inequality. Most of the funds went to thriving businesses instead of rescuing struggling businesses, with an arduous application process that only hurt small businesses’ eligibility to receive loans.

Early reports detailing where the $349 million went signify how the structural inequality of America’s banking system shut out millions of small businesses. National lenders, who awarded low-interest, forgivable loans as part of the CARES package, prioritized larger loan applications to maximize their own profits. Moreover, many participating banks required that businesses already hold loans with a bank to even be eligible for these payouts.

Small business owners who conducted their banking with a bank not approved by the federal government’s small business administration were further cut out of receiving aid, as having a working relationship with a certain lender significantly impacted their chances of even being eligible for aid.

Rollerland Skate Center's letter board reads "Spring Break Skate Additional Hours: Info at
The billboard for Rollerland Skate Center still advertises additional hours over spring break. The effects of the coronavirus hit just days before on Thursday, March 12. The business closed their public skating sessions a week later, in the middle of spring break. (Samantha Ye | College Avenue Magazine)

As small businesses owned by women and people of color are less likely to have commercial banking relationships, the stimulus package disproportionately hurt their chances of receiving aid. In fact, it is estimated that up to 90% of minority and women small business owners have been completely shut out of the Paycheck Protection Program.

While it’s true that the federal government did not handle the rollout of small business aid well, with reports of bureaucratic hurdles and significant delays, small businesses have been unfairly impacted by the coronavirus and continue to be sidelined by the federal government. Within the same CARES Act, $500 million was allocated for large corporate bailouts alone, despite the far fewer number of companies that make millions each year and the far greater wealth they possess.

All told, banks reaped over $10 billion in profits from simply administering federally granted loans, at a time when millions of small businesses are still struggling to survive. Replenishing the small business fund is only a start in order to “save the economy.” If Congress really wants to help small businesses, they need to address the inherent inequalities of America’s banking system to ensure that those who need aid receive it.

Corinne Neustadter can be reached at or on Twitter @CorinneN14.