Paycheck Protection Program II is half gone, with California grabbing largest share
The government's second round of economic assistance to small businesses impacted by the novel coronavirus outbreak is more than half gone. Nearly $176 billon, or 56%, of the Paycheck Protection Program's $310 billion second round had been approved as of the end of Friday, the U.S. Small Business Association reported.
In all, $525 billion of the program's $660 billion in forgivable loans charging just 1% interest has been approved through the program. That doesn't leave a lot left for the tens of thousands of businesses that have applied for aid and are still waiting.
More of the money in this second round appears to be going to smaller companies. The average size of the loans dropped to $79,000, down from an average of about $206,000 in the first round of the program, which distributed $350 billion in loans but ran out in mid-April in less than two weeks.
There also have been more than 2.2 million loans approved during the second round of the Paycheck Protection Program so far, more than the nearly 1.7 million loans that were approved in the entire first round.
Big companies or their affiliates appear to continue to be getting PPP loans, though. On Monday, restaurant chain Denny's said in a filing to the Securities and Exchange Commission hat franchisees representing nearly half of its restaurants have received PPP loans.
Small businesses in California grabbed a larger chunk of the second round of funding as well. The state's businesses accounted for more than $33 billion and just over 320,000 loans of the Paycheck Protection Program. That accounted for 19% of the companies nationwide in the second round. California businesses got just under 10% of the loan volume in the first round.
It was also more than any other state by far. New York had the second largest volume of PPP loans to small businesses while being the home to the most coronavirus cases. Businesses in New York got just over 164,000 loans for a total of $17 billion.
Texas businesses, which had gotten the most loan money in the first round of the Paycheck Protection Program, ranked third among states so far in the second round, with nearly $13 billion in loans.
Jared Ingold, owner of Vardagen, a Los Angeles-based apparel company that prints original, hand-drawn designs on garments, said his sales plummeted when the store closed and customers stopped placing orders.
"Retail is our biggest revenue stream, and also our print shop in Indianapolis where we do some custom printing. So the two biggest parts of the company were shut all the way down immediately," he said.
To keep his 10 workers gainfully employed, Ingold worked quickly to beef up internet sales by designing a coronavirus-themed collection and investing in online advertisements. He applied for an $80,000 loan through the program, which he plans to use on employee salaries and rent. He got approved and the loan was funded on Saturday.
"It would put us back on track, and we would be able to pull right through this. For what we are doing it would be really valuable," Ingold said.
The money in the first round of the Paycheck Protection Program didn't get to the areas of the country most impacted by the coronavirus, according to a study published as a working paper by the National Bureau of Economic Research on Monday. The study was co-authored by three economists from Chicago's Booth School of Business and one from MIT's Sloan School of Business.
The study's co-authors found that New York had among the highest percentage of businesses shut down by the coronavirus, yet the state's small business owners together received one of the smallest allocations when compared with the total number of small businesses in the state.
On the other end of the spectrum, South Dakota received one of the largest allocations of PPP funds by state as a percentage of the total number of local small businesses, yet the number of hours worked in South Dakota in March dropped by just 25%, one of the smallest drops in the country.
"We find little evidence that funds were targeted towards geographic regions more severely affected by the pandemic," the authors of the study wrote. "If anything, preliminary evidence indicates that the opposite is true and funds were targeted towards areas less severely affected by the virus."
CBS MoneyWatch's Megan Cerullo provided additional reporting for this article.
