With approximately two weeks left in the third iteration of the Paycheck Protection Program, here are some numbers to indicate how things are going with the distribution of hundreds of billions of dollars to keep people employed and to give a lifeline to businesses that need it — or cash to others who maybe don’t need it but are finding a way to get it regardless.
The current PPP program that kicked off in January, following back-to-back programs that wrapped up in August, was always targeted at smaller borrowers. Comparisons then between the current program and the one from earlier need to be viewed with that knowledge in mind.
But with the Small Business Administration releasing several weeks of data, there are several conclusions that can be drawn. If they aren’t conclusions, there are several trends that can be observed.
Transportation and warehousing share of loans hasn’t shifted
The view expressed by some observers when the latest round of PPP was announced was that the trucking industry might be doing too well in 2021 to get PPP money in round 3. But that’s hard to see in the data. What had been feared is that the requirement that a PPP loan recipient show a 25% drop in revenue in any recent quarter compared to a year earlier might be a tough test for this industry.
The transportation and warehousing sector is experiencing record-breaking freight rates and strong demand for storage space. (Transportation and warehousing is an NAICS category that combines the two industries for classification purposes). The sector reported PPP loans of 122,504 loans totaling $5.56 billion through Sunday. (The latest program began Jan. 13). That is 3.37% of all loans disbursed of the total amount of $164.95 billion.
In the first two rounds of the PPP — the initial round and then the resumption, under mostly the same rules, after an extension — transportation and warehousing accounted for 3.33% of all the loans. So there’s been remarkable consistency in what the transport and storage sector is getting out of the program compared to other industries.
Loan amounts shrink
One thing that has changed considerably is the size of the loans disbursed in transportation and warehousing. In the first two rounds that ended in August, the average loan in the transportation and warehousing sector was $76,331. The current round has an average loan size so far of $45,389.
One thing that isn’t happening soon is the program running out of money. The $164.95 billion disbursed through the third iteration of PPP through last Sunday comes out of an authorization of $284 billion through March 31. The latest Biden stimulus plan calls for an additional $7.25 billion in lending, but for two specific areas: nonprofits in addition to what was already authorized in that sector and a category called “digital news services.”
For the total program, the first two rounds had an average loan of about $101,000, way down from the early days of the program when that number ran around $300,000. The average loan size in this program in all sectors is about $68,000. But round 3 was always intended to be targeted at smaller companies; the first round was available for companies with up to 500 workers, and the second round cut that limit to 300.
Help for small businesses?
The entire PPP round closes March 31. The “small business only” two-week period, for companies with 20 employees or fewer, came to a close this past Tuesday. Data released by the SBA most recently only went through Sunday, so a few days of the 20-employee push are not in the data. But looking at the weekly reports for the week ending Feb. 21 and running through the most recent report — a period that would cover a good chunk of the small business period — loans disbursed were about $24.67 billion over two weeks.
The average weekly disbursement has been running at about $20.6 billion per week. It raises the question of whether the small business booster period actually accomplished anything or whether the total disbursements would inevitably have gone down given the size of the recipients during that designated period.
The entire small business thrust of the most recent PPP program has run into problems for some of the smallest borrowers, according to several media reports. The New York Times in a Tuesday article said some institutions, like Bank of America, had stopped taking small business applications in part because the rules have not been clear.
“The result has been gridlock and uncertainty that have left tens of thousands of self-employed people frantic to find lenders willing to issue the more generous loans before the program ends on March 31,” the article said.
However, with $164 billion loaned, it’s clear that a lot of people are getting money despite the reports of issues. Through Sunday, the number of loans approved was just more than 2.4 million. But the frustration and the happiness that appear to be dueling parts of the PPP program could be found in a posting on Reddit in a group specifically set up to swap tales of angst and success in applying for PPP money.
The person reported applying for second-round funding on Jan. 20. “Then crickets for weeks,” the post said. “After scouring Reddit it became clear to me that we had a SSN/EIN mismatch and no path forward. I lost hope that this would work out. I turned off [husband’s] payroll and prepared to live off my salary from my full-time job, hoping we could still keep his business open. Then out of nowhere 3/8 loan offer and signed closing docs 3/12. Money in the bank!! I am so relieved. I hope others in the same position get some good news soon!”