Month 9: The COVID-19 Pandemic and Economic Recovery
The COVID-19 pandemic exposed and amplified longstanding social and economic inequalities in healthcare and small business financing. Low-wage frontline workers, who are disproportionately people of color, faced higher exposure to the virus, worse health outcomes, and steeper economic setbacks than many of their peers. Federal relief programs such as the Paycheck Protection Program (PPP) mitigated some harm but were distributed unevenly, leaving many minority-owned small businesses with insufficient financial support. Such delays in access to federal aid resulted in longer recovery periods for Black-owned businesses compared to White-owned.
This paper explains how those two dynamics interacted to shape an unequal recovery and how subsequent policy choices have reinforced, not resolved those disparities. It also offers pragmatic recommendations to mitigate future inequities. The findings show that recovery outcomes were shaped not only by the scale of the crisis but by structural access to healthcare, capital, and institutional support, highlighting how policy decisions made during and after the pandemic continue to influence who is able to recover, who remains vulnerable, and why those gaps persist.
Frontline workers and disproportionate harm
From day one of the pandemic, certain jobs carried higher exposure. Grocery clerks, publictransport operators, nursing-home aides, custodians, and other low-wage essential occupations required close contact and often offered little ability to work from home. Racial and ethnic minorities are overrepresented in many of these occupations, resulting in higher infection and mortality rates for Black and Hispanic/Latin people in many places.
Two persistent drivers explain why outcomes differ so sharply. First, preexisting health inequities with higher rates of chronic conditions such as diabetes, hypertension, and asthma in some communities increased the risk of COVID-19. Second, differential access to health care, testing, and paid leave meant many in high-exposure jobs delayed care or could not isolate safely.
Policy choices under the 2025 Trump administration continue to reinforce these inequities for frontline workers. The expiration of enhanced Affordable Care Act premium tax credits and changes to federal Medicaid and marketplace funding have driven premium increases and
Author: Nucdalie Cherident, Policy & Research Director African American Alliance of CDFI CEOs
Date of Publication: January 22, 2026
reductions in enrollment in ACA marketplace plans, with early figures showing enrollment down about 800,000 in January and significant cost pressures on low-income workers. Analysts project that unless subsidies are renewed, uninsured rates will climb and affordability barriers will worsen for essential and minority workers.
PPP disparities and small-business recovery
The Paycheck Protection Program (PPP) was the largest small-business relief program in U.S. history. It was established by the CARES Act and aimed to “provide small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead.” Although many firms and jobs were saved, distribution was unequal as Black and Hispanic-owned businesses were less likely to receive PPP funds out of the $349 billion distributed in the first round. According to a Bloomberg analysis, 27% of businesses in majority-White districts received loans compared to 17% in majority-minority districts despite similar need levels
Reasons for this gap in access included lower preexisting banking relationships with large lenders, limited application assistance, and, in some places, evidence of lender discretion and bias. With growing negative economic impact from the pandemic, a second round was appropriated. This was disproportionately done through nontraditional banks and fintechs as drivers for the disbursement of PPP loans to minority communities. These disparities had lasting consequences for recovery, widening the gap between Black and White-owned businesses well beyond the formal end of the program. Early access mattered as firms that failed to secure full PPP support were more likely to report ongoing financial stress and delayed revenue recovery. In many cases, Black-owned firms indicated they had not returned to pre-pandemic levels well into 2021 or later. In contrast, White-owned firms reported a quicker rebound in operations and employment.
Relatedly, recent federal actions under the current administration have raised serious concerns among congressional leaders about the proposed elimination of the Minority Business Development Agency (MBDA) and cuts to SBA programs such as Women’s Business Centers and SCORE mentorship resources, which historically directed capital and technical assistance to minority entrepreneurs and helped narrow funding gaps. Without these targeted supports, federal small-business programs risk delivering broadly distributed assistance that disproportionately benefits firms with existing banking relationships and access patterns that mirror the uneven PPP roll-out, rather than correcting inequities in access to capital and recovery.
Policy Recommendations
One feasible policy response to the continued health and economic vulnerability of frontline workers is to expand and standardize state-based reinsurance programs and employer-led coverage pathways over reinstating enhanced ACA subsidies. Reinsurance programs lower insurance premiums by offsetting insurers’ highest-cost claims, reducing costs without expanding
Author: Nucdalie Cherident, Policy & Research Director African American Alliance of CDFI CEOs
Date of Publication: January 22, 2026
federal entitlement spending. This approach aligns with the Trump administration’s emphasis on market-based solutions and state flexibility through Section 1332 waivers Evidence from states such as Alaska, Colorado, Maryland, and Minnesota shows that reinsurance programs reduced ACA marketplace premiums by 15–30 percent, improving affordability and stabilizing coverage for low-wage and essential workers
A second feasible policy recommendation is to formalize a permanent SBA lending and recovery channel that prioritizes capital delivery through CDFIs, minority depository institutions (MDIs), and vetted financial technology lenders. Instead of relying primarily on large commercial banks, this approach institutionalizes lessons from the second round of PPP, when nontraditional lenders played a central role in reaching underserved businesses. This model is consistent with the administration’s preference for private-sector delivery and efficiency and does not require racebased eligibility, instead focusing on firm size, loan amount, and underserved markets.
Conclusion
The unequal recovery that followed COVID-19 was the result of unfair policy structures. Frontline workers faced heightened health risks without reliable access to affordable coverage, and Black-owned small businesses confronted delayed or insufficient financial support at a crucial time. Together, these conditions prolonged economic instability in communities that were already carrying a disproportionate share of the pandemic’s human and financial costs. These conditions also signaled that neutral recovery policies can still produce unequal outcomes when underlying access gaps go unaddressed.
The policy recommendations outlined show that narrowing these gaps does not require recreating pandemic-era programs or expanding federal entitlements. Instead, it requires strengthening market infrastructure where it failed: lowering healthcare costs through proven state-based mechanisms and ensuring that small-business capital reaches firms historically excluded from traditional banking channels. The lessons of the pandemic are clear. Without intentional attention to access and implementation, recovery policies will continue to benefit those already positioned to recover first. Addressing these failures now is essential not only for equity but for building a more resilient and inclusive economic system capable of responding to future crises.
Author: Nucdalie Cherident, Policy & Research Director African American Alliance of CDFI CEOs
Date of Publication: January 22, 2026