Where have the small business relief loans gone?







Total loan value per small

company employee in each state

Total value of loans per small business employee in each state

Total value of loans per small business employee in each state


Source: Small Business Administration

A centerpiece of the federal government’s economic relief plan is to provide billions in forgivable loans to struggling small businesses during the coronavirus pandemic.

But analyzes of government data show that the loan program, which is overseen by the Small Business Administration, has allowed many of the early funds to go to areas of the country that have not been so badly affected by the coronavirus. , as well as a small number of companies seeking millions of help.

Midwestern companies got a disproportionate share in the first loan cycle.






Total loan value per small

company employee in each state

Total value of loans per small business employee in each state

Total value of loans per small business employee in each state


Data from the 2nd round up to May 1·Source: Small Business Administration

The country’s largest banks are often big lenders to small businesses, but in the first of two rounds of the program, community banks and regional institutions made most of the loans, according to one. analysis by a group of economists from the University of Chicago and MIT.

This contributed to a disproportionate share of loans going to areas that were not as badly affected by the virus.

Businesses in Iowa, Nebraska and North Dakota were among the largest recipients of early aid when considering the number of people working for small businesses in each state, according to an analysis by The Times. The three states are below the national median for virus cases per capita, and no statewide lockdowns as the epidemic began to spread nationwide.

One of the reasons for this uneven distribution is that the big banks slow to lend when the program started, in part due to bureaucratic delays, and they imposed rules that blocked many people seeking help. The 20 largest banks accounted for 41% of small business loans nationwide before the pandemic, but issued only 20% of first-round loans, Chicago and MIT economists found.

Since then, the big banks have made a lot more loans. Businesses in worst-hit states like California and New York have so far claimed a larger share of the money in the second round, which began in late April after Congress approved a new round of funds when the money quickly ran out in the first wave.

Many small loans have been issued recently, but loans worth over $ 1 million made up a large chunk of the money initially paid out.






Share of loans in the round

Share of loans in the round


Data from the 2nd round up to May 1·Source: Small Business Administration

Loans over $ 1 million were only 5% of those approved in the first round, but they were about half of the total money. This favored large companies seeking larger sums.

Many of these companies already had strong relationships with their banks, which helped them place themselves on the front line, and some banks prioritized their most lucrative clients. More … than 300 SOEs reported receiving the loans, although many have since returned the money after mounting backlash.

The program review prompted officials to impose new eligibility rules for companies. The loans have since shifted to smaller amounts, suggesting that small businesses were benefiting from the aid. In the first round, the average loan amount was $ 206,000, according to the SBA. After a week of the second round, it was $ 79,000.

Small businesses employ about half of the nation’s non-government workers, and most have fewer than 100 employees.






Share of employment in the United States by company size

Share of employment in the United States by company size

Share of employment in the United States by company size


Figures are for the first quarter of 2019 and are not seasonally adjusted.·Source: Bureau of Labor Statistics

The government generally defines a small business as a business with up to 500 employees. In 2016, the last year for which the government published annual estimates, there were nearly 31 million small businesses operating in the United States, employing nearly 60 million workers.






Small Business Employees,

in thousands

Small business employees, in thousands

Small business employees


Figures rounded to the nearest hundred·Source: Small Business Administration

The stimulus program was created to help businesses pay their workers for an eight-week period in April, May or June. Plaintiffs did not have to prove a sharp drop in sales or any other specific injury. They simply had to certify that “the current economic uncertainty makes this loan request necessary” to support their operations.

But many of the more devastated businesses – like restaurants and service providers – have already laid off workers and don’t know when their sales will return. Since program rules require companies to keep their workforce at pre-pandemic levels (those cutting positions have a brief window to rehire) if they want their loans canceled, these companies are having a much harder time. to take advantage of the program only companies that still have their full workforce intact.

Indeed, according to economists from Chicago and MIT, the early stages of the program “worked less like social insurance to support the hardest hit areas” and more like a cash injection “for the less affected businesses.”

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