From PF Chang’s to North Dakota: the main beneficiaries of the PPP
While the Paycheck Protection Program has been extended through August 8, a series of data released Monday by the US Small Business Administration and the Treasury Department offer new details on the scope of the historic business recovery programas well as the industries that received the biggest boost.
The agencies also noted, by name, the hundreds of thousands of individual businesses that have received more than $150,000 in funding through the program. In addition to fast food restaurants and religious institutions, restaurant chains like Legal Sea Foods and PF Chang’s got millions from the forgivable loan program aimed at supporting small businesses in difficulty.
In total, the agencies say the program has sent more than $521 billion to nearly 4.9 million businesses since early April, with the healthcare and IT services sectors among the top recipients. The average loan size was $107,000.
“PPP provides much-needed help to millions of America’s small businesses…who are the engines of economic growth in our country,” Treasury Secretary Steven Mnuchin said in a statement touting the program. He said PPP has helped support more than 51 million jobs and more than 80% of all small business employees.
But when we look at the full range of american small businesses, which numbered 30.2 million before the pandemic, the program is insufficient. Only 16% of US small businesses have successfully leveraged PPP. Additionally, companies in certain states seemingly less affected by the pandemic often had proportionately higher PPP approvals for small businesses than those in more affected states.
While not all businesses needed emergency relief during this crisis, it seemed somewhat inexplicable that businesses in North Dakota and Nebraska had a better record of securing federal funds than those in the Hardest hit states including New York and California. PPP loan approvals relative to the number of small businesses in North Dakota and Nebraska hit 27% and 24%, respectively, while businesses in New York and California had an approval rate of about 14% .
But a joint University of Chicago and Massachusetts Institute of Technology study of the first wave of PPP payouts found that regional and community banks in less populated areas were simply more effective at dispersing PPP lending than large national banks with a dominant presence in cities.
A look at the latest numbers – showing the total volume of loans by state, compared to the number of small businesses in each state – indicates that the trend has continued through the second round. In other words, companies in states that made early gains maintained that momentum throughout the life of the program. And the institutions that have succeeded in helping small businesses take advantage of the program have continued to be successful.
See below for an overview of where PPP money is going versus the number of small businesses in each state for each funding round and overall:
Additional reporting by Gabrielle Bienasz.