As the United States faces unprecedented levels of economic distress and unemployment, the Payment Protection Program (PPP) has provided a number of businesses with forgivable loans to support their employee’s salary. Due to the programs’ popularity, the current administration signed a new law extending the deadline for applications for the $650 billion loan program. As of June 30th, the program has issued 4.9 million loans averaging $107,000, and now has $132 billion remaining. Though, the program has faced increased scrutiny and calls for transparency for loan data as concerns of fraud and abuse have become more prevalent.
Healthcare comes out on top
Many trends regarding loan allocations by industry have continued with newer PPP data released by the Small Business Administration. Accordingly, the Health Care and Social Assistance, Professional, Scientific, and Technical Services, and Construction industries in the United States received 12.9%, 12.7% and 12.4% of total funds, respectively. The shift of healthcare sector to the top is likely due to the increased demand for employees in hospital settings to support the recent rise in coronavirus cases. Additionally, California, Texas and New York continue to account for the highest amount loans at $68.2 billion, $41.1 billion and $38.3 billion, respectively, which is roughly in line with each states’ population and loan count. As for lender type diversity, banks account for an overwhelming majority of loans, net dollars and jobs retained. Commercial banks have lent small businesses nearly $500 billion over 4.4 million loans, with JPMorgan Chase Bank at the top, lending over $29 billion. Next in line, though accounting for a much smaller portion are credit unions, which lent $9.7 billion over 196,000 loans.
Rising scrutiny despite positive statistics
The PPP has been quoted with compensating 51.1 million jobs; however, there have been serious calls for greater scrutiny as the initial $350 billion was nearly drained after two weeks. Already, $30 billion in PPP funds have been returned from chain restaurants, hoteliers and major public companies after increased negative press coverage. The SBA program was initially designed for smaller local businesses rather than the larger companies with over 500 employees and greater access to capital. However, industries with close connections to banks have shown to have an easier time securing loans. Still, economists require more data to evaluate the overall success of the program.
