With about two weeks left in the third iteration of the Paycheck Protection Program, here are some numbers to show how things are going with the distribution of hundreds of billions of dollars to keep people working and to give a lifeline. to businesses that need it – or money to others that may not need it but still find a way to get it.
The current PPP program which started in January after consecutive programs which ended in August has always been aimed at small borrowers. Comparisons between the current program and the previous one should therefore be viewed with this knowledge in mind.
But with the release of weeks of data by the Small Business Administration, several conclusions can be drawn. If these are not conclusions, several trends can be observed.
The share of loans related to transport and storage has not changed
The view expressed by some observers when announcing the last round of PPP was that The trucking industry may be doing too well in 2021 to get PPP money in turn 3. But it’s hard to see in the data. What was feared was that the requirement that a PPP loan recipient show a 25% drop in income in a recent quarter compared to the previous year could be a difficult test for this industry.
The transportation and warehousing industry is experiencing record freight rates and high demand for storage space. (Transportation and warehousing is a NAICS category that combines the two industries for classification purposes). The industry reported 122,504 PPP loans totaling $ 5.56 billion as of Sunday. (The last program started on January 13). This represents 3.37% of all loans disbursed out of a total amount of $ 164.95 billion.
In the first two rounds of the PPP – the initial round and then the resumption, under the same rules for the most part, after an extension – transport and warehousing accounted for 3.33% of all loans. So there has been remarkable consistency in what the transportation and warehousing sector gets out of the program compared to other industries.
Loan amounts are decreasing
One thing that has changed dramatically is the amount of loans disbursed for transportation and warehousing. In the first two rounds that ended in August, the average loan in the transportation and warehousing industry was $ 76,331. The current round has an average loan size so far of $ 45,389.
One thing that won’t happen anytime soon is that the program is running out of money. The 164.95 billion dollars disbursed during the third iteration of the PPP until last Sunday comes from an authorization of 284 billion dollars until March 31. Biden’s latest stimulus package provides an additional $ 7.25 billion in loans, but for two specific areas: was already licensed in this industry and in a category called “digital information services.”
For the entire program, the first two rounds had an average loan of about $ 101,000, down from the early days of the program, when that number was around $ 300,000. The average loan amount under this program across all sectors is approximately $ 68,000. But Cycle 3 has always been meant to target small businesses; the first round was available for companies with up to 500 workers, and the second round reduced that limit to 300.
Help for small businesses?
The entire PPP cycle ends on March 31. two-week “small business only” period, for companies with 20 employees or less, ended last Tuesday. The data released by the SBA was only released on Sunday, so a few days of the 20-employee push is not included in the data. But looking at the weekly reports for the week ending February 21 and going through the most recent report – a period that would cover a good chunk of the small business period – the loans disbursed stood at around 24, $ 67 billion over two weeks.
The average weekly disbursement is about $ 20.6 billion per week. This raises the question of whether the small business recovery period actually accomplished anything or whether total disbursements would inevitably have declined given the size of beneficiaries during this designated period.
The whole small business focus of the most recent P3 program ran into problems for some of the smaller borrowers, according to several news reports. The New York Times, in an article published Tuesday, said some institutions, such as Bank of America, had stopped accepting applications from small businesses in part because the rules were unclear.
“The result was a stalemate and uncertainty that drove tens of thousands of frantic self-employed workers to find lenders willing to issue the most generous loans before the program ended on March 31,” the article said.
However, with $ 164 billion on loan, it is clear that a lot of people are getting money despite reports of problems. As of Sunday, the number of approved loans exceeded just over 2.4 million. But the frustration and happiness that seem to be due to parts of the PPP program could be found in a post on Reddit in a group specially created to exchange stories of angst and success in asking for PPP money.
The person said they applied for second round funding on January 20. “Then crickets for weeks,” the post said. “After going through Reddit, it became clear to me that we had an SSN / EIN mismatch and no way forward. I lost hope that this would work. I shut down [husband’s] pays and ready to live off my salary from my full time job, hoping we could always keep his business open. Then out of nowhere loan offer 3/8 and signed closing documents 3/12. Money in the bank !! I am so relieved. I hope others in the same situation will receive good news soon! “