The distribution of Paycheck Protection Program loans for small businesses hasn’t been smooth, from unclear guidelines to technical problems.
A most disconcerting issue has been large and wealthy businesses being able to obtain the loan, while much smaller businesses have not.
While some attribute it to pressure being put on government and banks to release loans as quickly as possible, as a scholar of microbusinesses and the informal economy, I believe much of the public’s frustration with how the PPP was paid out is related to how the federal government defines small business.
What is a small business?
When most of us think of small businesses, we imagine a local business such as our favorite pizzeria on Main Street, the bodegas and street vendors in New York City or even our local plumber.
My own research focuses on the social welfare of immigrant families that run such businesses. Often with just a handful of employees – and in many cases, just one – these businesses are nowhere close to the limit of 500 employees the government used to limit qualification for the PPP loan.
Businesses with fewer than 10 employees are known as a microbusiness to researchers. They are the most common type of business in the United States.
Yet were we to ask microbusiness owners if they have heard of the term microbusiness, most would likely say no.
In fact, researchers and policymakers define small business in a number of ways, some of which make more sense than others.
