No Relationship Between PPP Loans And Covid-19 Outbreaks

Cities in California, Florida, New York and Texas have been home to some of the worst Coronavirus outbreaks in the country, but new data show that federal loans to small businesses didn’t necessarily follow the same pattern.

A new analysis from the nonprofit USA Facts says that the distribution of Paycheck Protection Program loans smaller than $150,000 (the majority of loans) was not consistent with the level of coronavirus spread among the 30 most populous counties. For example in New York, the Bronx reported the highest cumulative COVID-19 case count through June 30 at 3,400 cases per 100,000 people. But the Bronx had among the lowest rates of PPP loans at about $17 million per 100,000 people.

In contrast, the report said, Manhattan averaged 1,700 cases and almost $121 million per 100,000. Queens, Brooklyn, and the two counties of Long Island fell somewhere in the middle.

While it’s an indicator of the first-come-first-serve nature of the program, the fact that the loans don’t correspond to case counts doesn’t mean they’re not working or being used appropriately. It just reflects how the health and economic consequences of the pandemic, while linked, affect places differently, the report said.

“With reduced travel, more people staying at home, and fears about where the pandemic might spread next, even places with few COVID-19 cases can face damage to local economies,” it said.

For instance, Florida counties that rely on tourism reported lower average case counts but a higher loan rate. Neighboring Broward and Palm Beach counties reported case counts of 800 and 945 per 100,000, respectively (as of June 30). And both had higher average loan rates of about $64 million per 100,000.

So far, more than 5 million PPP loans have been doled out to businesses since April, totaling $521 billion in federal assistance. The data in the report reflects loan approvals through July 31. The loan application window was extended through Aug. 8.

Some other key highlights from the data:

Businesses in the Northeast and Upper Midwest received the highest loan amount per capita.

• North Dakota reported the highest loan amount at $2,329 per capita, followed by Massachusetts at $2,067.
• Connecticut, Minnesota, New Jersey, New Hampshire, New York, South Dakota and Vermont all reported per capita loans of more than $1,800.
• USA Facts notes that, particularly for the more sparsely populated Midwest, the higher per capita loan amount “might reflect a higher ratio of small businesses to people in this section of the country.” Plus: These same counties have historically reported high rates of small business jobs as a share of total employment.

Businesses in the South, Appalachia, and Southwest received the lowest loan amount per capita.

• West Virginia had the nation’s lowest loan amount per capita at just $989.
• It’s followed by Mississippi ($1,067 per capita) and New Mexico ($1,077 per capita).
• Alabama, Arkansas, Arizona, Kentucky, North Carolina, South Carolina and Tennessee also reported loans totaling less than $1,300 per capita.

The distribution was vast — more than 5 million loans so far — but uneven. While most PPP loans were smaller, a fraction (14%) of the large loans accounted for nearly $3 of every $4 loaned. That means that the distribution of big loans likely mattered more than that of small loans when it came to the final payout for local economies.

Among the 30 most populous cities analyzed in the data, businesses in the professional, scientific, and technical sector received the largest loans. Las Vegas, Denver, and Portland were among the highest recipients of these high-dollar loans on average (per 100,000 residents). At the other end of the spectrum, are El Paso and Detroit.

This disparity also has racial implications down the line, given that El Paso and Detroit are majority minority cities.

“Detroit and El Paso also received the fewest loans overall compared to other major cities, as well as fewer large loans,” the report noted. “As the pandemic continues, with higher mortality rates for Black and Hispanic Americans, such statistics raise the potential of additional disparities when it comes to the economic fallout.”