by: Mellissa Chang
February 4, 2021--Earlier this week, the Small Business Administration (SBA) quietly released a massive trove of Paycheck Protection Program (PPP) loan data. Data are now available for all first and second round loans with approval dates up to January 31.
This disclosure affords the public its first opportunity to examine the program’s second round, which re-opened on January 11. During the first two weeks of the application window, the SBA has approved more than 891,000 loans, amounting to $73 billion.
Notably, the average loan amount for this period is almost $82,000—roughly $20,000 less than the average loan amount from the PPP loans issued in round one. The average number of jobs that applicants reported that they would save is also down, falling from 12 to nine in the second round.
Additionally, the SBA’s latest release adds valuable contextual data, including franchise relationship specifications, anticipated spending breakdowns by category (e.g., payroll, health care, rent, etc.), and rural/urban designations for all loans approved in round one and two.
The new dataset breaks down intended loan spending into six categories: payroll, health care, rent, mortgage interest, debt interest, and Economic Injury Disaster Loan (EIDL) refinancing. These breakdowns lend themselves to interesting comparisons between borrowers.
For example, virtually all of the $73 billion in round two loans was allocated to payroll—a slight increase from the first round of funding, where businesses intended to spend roughly 96% of all funds on payroll. Interestingly, health care allocations were conspicuously absent from round two loan allocations. Not one recipient reported earmarks for health care.
Recipients affiliated with a franchise are also identified in the SBA’s newest release. In round two alone, franchisees scored almost $3 billion in PPP loans. The top five franchises—Subway, IHOP, Holiday Inn Express, Best Western, and Denny’s account for 15% of the total funding given to franchises in round two.
For round one loans, McDonald’s franchisees received the most PPP funding at $1.2 billion, followed by dealerships connected to car manufacturers GM, Ford, Toyota, and Chrysler. These four car manufacturers and McDonald’s represent more than 25% of all loans approved for franchises in the program’s first round.
Reporting demographic information remains optional in round two, but nonetheless, the percent of borrowers that have disclosed their race has increased 11% over round one. Notably, the share of Hispanic borrowers increased from 0.8% to 2.3%, Black or African American borrowers from .33% to almost 2%, Asian borrowers from 1.1% to 2.6%, and American Indian or Alaska Native from .06% to 1.2%.
Rural, Urban & Low-to-Moderate Income Communities
In round two, businesses in rural areas account for 30% of all loans—a full 10% more than loans in round one. Lending to businesses in urban areas is down to 70%.
Furthermore, approximately 26% of second round recipients are listed as low-to-moderate income (LMI) enterprises. LMIs are generally defined as businesses located in census tracts where a majority of households have incomes at or below 80% of the median income for the larger Metropolitan Statistical Area.
All 891,000 round two recipients were in business for more than two years. This is a dramatic change from round one where almost 14% of borrowers had been in business for two years or less. Even still, if the first round of the PPP, wherein established businesses seeking bigger loans were first in line, is any indication of when businesses will receive loans in round two, we can expect to see younger businesses receiving loans in the coming weeks.
This data only represents a small portion of what the second round of PPP loans will likely be, but it does suggest some small shifts are occurring in the program. Even still, they don’t obviate the need for additional reforms in the next stimulus package, and Congress will need to take bold action to support workers and the most vulnerable small businesses.
These new loans and updated data will be added to Covid Stimulus Watch in the coming weeks.