Congress approved a third round of funding for the Paycheck Protection Program (PPP) on December 21. But the question remains as to what the program — which dispensed over $525 billion in funding as of August, when it first ended — has done for American businesses. Loan-level data released in December by the Small Business Administration (SBA) might hold the answer.
The record of individual loans remains incomplete, with around 55,300 loans representing almost $2.1 billion unaccounted for when compared to the totals stated in SBA summary reporting of the program. Even loans included in the dataset can be missing information, with almost 3% lacking industry identification. But the detailed data, combined with information from SBA summary reporting, allows for the fullest analysis yet of who got PPP money.
The loan-level dataset shows that full-service restaurants received the largest number of approved loans and the most total dollars, accounting for over 175,000 loans worth $20.4 billion — almost 3.9% of the total $525 billion dispensed through the program. Doctors, lawyers, and new car dealers followed with the most money, receiving over $10 billion each in approved loans.
The PPP broke with traditional SBA policies in making nonprofits eligible for small business loans, including religious organizations — which received $7.3 billion or 1.4% of all PPP money, according to the loan-level dataset. Civic and social organizations received just under $1.6 billion, and other nonprofits got around $5.2 billion.
SBA summary reporting includes totals at the sector level. Healthcare and social assistance, which employs the most small business employees of any sector, received the largest share of loan dollars (12.9%) as of August. That is a shift from the initial round — April 3 to April 16 — when construction received the most.
The loan-level data reveals more about industries and loan size. Large loans added up, with several industries receiving over $45 billion each in loans of $150,000 or more. Among them were construction; healthcare and social assistance; professional, scientific, and technical services; and manufacturing.
According to the loan-level data, 609 businesses received the maximum loan amount of $10 million. They included 98 full or limited-service restaurant chains, among them the corporate offices of PF Chang’s, TGI Friday’s, Potbelly Sandwich Shop, and White Castle. Following restaurants, medical clinics and groups, as well as hospitals, were the next most common recipients of the $10 million, receiving 41 such loans.
The 1% of businesses that received the largest loans — from $1.4 billion up to $10 billion — received 27% of all PPP dollars. By contrast, the 75% of businesses that received loans of around $70,000 or less accounted for under 16% of total PPP funding. According to the loan-level data, there were 127 businesses with loans of $50 or less; 30 with loans of $10 or less; and three with loans of four, one, and zero cents, respectively. It is unclear the extent to which this is attributable to errors in data reporting or is an accurate picture of how the program operated.
The program was meant to support up to eight weeks of payroll, and all reviews of job retention — to assess whether the government would forgive all or part of the loan — occurred at the end of that period. That means that businesses that received loans valued at less than eight weeks of payroll still needed to make it through the entire two months in order to take advantage of loan forgiveness. Did PPP loans fill payroll need for most businesses?
Despite the wide variation in loan sizes, most loans seem to have covered the expected amount of time: an average of 9.6 weeks of payroll. That analysis compares the median loan value per reported job saved to average industry payroll per small business employee as reported by the Census Bureau.
Looking at the 25 industries that received the highest number of loans, there was variation in the amount of payroll covered. Loans to financial businesses averaged 3.6 weeks of pre-pandemic payroll, and those to sports and the performing arts averaged 5 weeks. Meanwhile, loans to food and drinking places covered 11.8 weeks of payroll. Of course, the average wage differs across industries, with a finance employee costing an average of $14,200 more per month to employ than one working in a restaurant or bar. Were financial businesses to retain their employees at restaurant-industry wages, the loans given would support them for an average of 37.8 weeks, or over nine months.
The PPP appears to have accomplished its goal of supporting many small businesses for around eight weeks of payroll — although it is unclear whether the jobs it saved in the short term survived the months after the program ended. Jobs that did must now contend with tightening COVID-19 restrictions amid a winter surge of cases. Congress has approved a third round of funding for PPP for businesses that did not previously receive loans; smaller and harder-hit businesses will also be eligible for a second loan.
For the "How long will loans last businesses?" section:
While there are 99 three-digit NAICS code industry groupings represented in the loan-level PPP data, only 85 have annual payroll data as reported by the SBA. These 85 formed the basis of the calculation.
To estimate the 9.6 weeks of payroll average, the calculation takes the median loan value within each industry and divides it by the average payroll for that industry to calculate the percent of payroll covered by the loan. It then calculates the overall mean of the percent of payroll covered across all industries, weighted by the number of loans granted to each.
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