The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security Act that was passed in the spring. Its purpose is to provide cash to businesses during the economic shutdown so that they will not have to lay off employees or go out of business. The $669 billion program is managed by the U.S. Small Business Administration.
Recipients of PPP low-interest loans can use them to cover payroll, rent, interest, and utilities. The loans may be partially or fully forgiven if employees are retained and their wages are not cut.
The SBA recently released data on loan recipients through June 30 (the program will continue through August 8).
Data for loans of
less
than $150,000 includes the exact amount of the loan, but does not identify businesses by name and address. Data for loans of
more
than $150,000 includes the business name and address, but reports loan amounts in ranges.
Eastern Shore businesses received 6,598 loans. Of these, 5,699 were below $150,000, and 899 were above $150,000.
Because of the way the data were released, it is not possible to calculate a total loan value. Instead, we can say that the Eastern Shore counties received $206.3 million in loans of less than $150,000 (averaging just over $36,000 per loan), and somewhere between $278–706 million in loans of more than $150,000.
• 4 loans were in the $5–10 million range
• 18 loans were in the $2–5 million range
• 52 were in the $1–2 million range
• 282 were in the $350,000–1 million range
• 543 were in the $150,000–350,000 range
Retail trade, construction, other services, and accommodation and food services industries received the highest numbers of loans on the Eastern Shore.
The data released claims that 78,487 jobs were retained on the Eastern Shore as a direct result of PPP loans. But the jobs data is probably unreliable. The
Washington Post
reported, “A Post analysis…shows that many companies are reported to have ‘retained’ far more workers than they employ. Likewise, in some cases the SBA’s jobs claim for entire industries surpasses the total number of workers in those sectors.” The source of these errors is not known.
The SBA datasets include fields for race/ethnicity, gender, and veteran, but most of these are blank, so no conclusions can be drawn. The same
Washington Post
analysis, however, taking an in-depth look at the data, concludes that Black-owned businesses and businesses owned by people of color are severely underrepresented in the universe of PPP loan recipients. The researchers conclude that this is at least in part due the weak network of financial support services available to these businesses.
Nationally, the
majority of loan recipients have spent through their loans
and may be forced to start laying off employees if additional help from the federal government is not received. The reopening of the economy is stalled or reversed in many areas of the country, and a lot of people are reluctant to resume normal activities. Here on the Eastern Shore, we have been more fortunate than some places, but covid-19 restrictions are still in place and businesses are not operating normally. We will see in the next few weeks whether Congress can agree on more help for small businesses.