Where did the PPP Loans Go?

On April 3, The U.S. Small Business Administration (SBA) released The Paycheck Protection Program (PPP) to support small businesses across the country. For the first round, Congress allocated $349 billion to the program which was followed by another $310 billion for the second round that started late April. Thus far, over 4.2 million loans (more than $531 billion) have been approved, as of May 8th.

When SBA recently made the state-level statistics related to PPP available (1st wave on April 16 and 2nd wave on May 8th), it gave researchers an opportunity to analyze the loan data. While we are waiting to receive the microloan data we requested, we took a closer look at some of the aggregate statistics, in order to further reveal insights.

First, using Census data, we compared the number of small businesses (SMBs, with <500 employees) in each state to the approved PPP loans, to estimate the PPP approval rates (e.g. percent of PPP recipients among all small businesses)¹ as follows:

This heatmap shows us the distributions of # of approved loans (1st round + 2nd round) across the states. We can easily spot the extremes with states of DE, WA, AK, NY on the lower end to the states of ND, SD, NE, MS on the higher end where almost all the SMBs got benefited by PPP loans.

Next, we explored how PPP approval rates compare to the insured unemployment rates (cumulative claims % of insured employment) using the Department of Labor’s weekly unemployment claims data . Here the size of the circle represents cumulative # of confirmed COVID-19 cases as of May 12th.

One interesting finding from the plot above is that almost all states with more than 40K confirmed cases (TX and FL are exceptions) have an insured unemployment rate greater than 5%. These are the hardest-hit states unlike the states in the top left cluster where more than 80% of SMBs got PPP loans.

Finally, we made a color-coded quadrant plot to compare state-level PPP approval rates to national approval rates in round 1 v. round 2. For example, the green-colored states in the top-left quadrant are ones with low approval rates in the first round and high approval rates in the second round. Similarly, the red-colored states in the bottom left quadrant represent states with low approval rates in both rounds of funding. Similar to the above, the size of the data points represent the outstanding number of cases as of May 12th.

None of the results reported in this study is prepared for purposes of policy decisions, because we do not have access to detailed micro data at the borrower, bank and loan levels. Please do not hesitate to contact us at arjit@iamecon.com if you have any questions.

1. We understand that there are various other criteria on the eligibility conditions, and we are unable to determine the exact number of eligible businesses.