Introduction

Paycheck Protection Program I

Paycheck Protection Program I

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Phase 2 of the Paycheck Protection Program (PPP) portion of the CARES Act (aka, the “Coronavirus Aid, Relief, and Economic Security Act'') began on April 27th with some of the same hiccups that Phase 1 experienced (primarily difficulties with the website) but that will happen when thousands of people try to access a page at the same time. But, we do have some preliminary data available now from Phase 1 of the PPP.

An April 16th report from the Small Business Administration (SBA) revealed that well over 1.6 million loans had been approved under the first wave of PPP for a total of $343 billion, nearly depleting the $350 billion allotted in a matter of days.

Since then, there have reportedly been at least 13 companies that are NOT small businesses, and have voluntarily returned a combined $170 million. These companies included AutoNation ($77 million) and the Los Angeles Lakers NBA Team ($4.6 million) among others.

The fact that these companies were approved for PPP loans prompted the SBA, in conjunction with the Treasury, to pledge to review all loans in excess of $2 million—there were nearly 26,000 in Phase 1—so as many small businesses as possible can have their chance.

To put this in perspective, fewer than 1.6% of the loans, by number, account for almost 30% of the total dollar volume allotted. Conversely, there were over 1.2 million loans of $150,000 or less representing 74% of the count but just 17% of the total dollar amount.

Understanding that these numbers will likely be revised, and the overall number of loans should increase while the average loan size (currently estimated at $206,000) should decrease substantially, the breadth of the Phase 1 of the PPP has been far-reaching. Every state and every territory has been able to take advantage of the program to some degree.

The sector with the biggest slice of the pie in Phase 1 was construction. Nearly 178,000 construction companies will share almost $45 billion, or 13% of the approved funds. Professional (incl. scientific & technical), Manufacturing and Healthcare followed, each with over 11% of the total.

Part of the SBA report on Phase 1 was a state-by-state chart of approved loans by the number and by dollar amount. We have provided those numbers on page 7.

To make the data more meaningful, we also included:

  • The number of banks operating in the state;
  • The number of credit unions headquartered in the state;
  • The percent of the total dollar amount that was allocated to businesses in the state; and
  • The average loan amount approved in the state.

The state of Montana, which by most accounts has been spared the worst of COVID-19,  has fewer than 100 banks and credit unions combined. Yet, it granted 13,456 loans in Phase 1. Many of these likely went to the Agriculture sector, which we all know is suffering immensely. At just over $109,000, the average loan amount granted in Montana was the lowest in the nation. Wyoming was a close second also averaging under $110 ,000. That brings us to the other end of the spectrum. California has claimed the largest amount of PPP funds (9.76%). Its 480 banks and credit unions granted almost 113,000 loans totaling $33.5 billion. The average loan amount was $296,000.

Texas took 8.3% of the pie followed by New York with 5.94% and Florida with 5.22%. The area with the highest average loan amount: Washington DC at over $383,000 dwarfing all others… including California.

In addition to the PPP, the SBA has several other programs available to help small businesses cope with COVID-19. To find out more visit their website.

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