Here’s why some states get more help than others from the Paycheck Protection Program
Funds dried up in less than two weeks for the Paycheck Protection Program, which was meant to keep small businesses from closing during the coronavirus pandemic.
The fund started with $349 billion after it was approved by Congress as part of the stimulus package in early April, according to Forbes. The money was claimed by 1.6 million — or 6 percent — of the nation’s small business owners, Forbes reported.
The other 94%, a good chunk of which applied for loans as part of the PPP, are out of luck for now, according to Forbes. Most of the funds, in terms of dollars, went to businesses in the biggest states, such as Texas and California, Time reported.
But the percentage of small businesses in a state that got the loans tells a different story, according to Time. Numbers from the U.S. Small Business Administration showed that states in the Midwest received a much higher percentage of loans from the federal program than bigger states, particularly the ones hit hardest by the coronavirus, Time reported.
The PPP was designed to mitigate the economic impacts of the pandemic, but the uneven distribution of loans may be counterintuitive, according to Time. Small businesses in states like California and New York were not able to access funds at the same rate as Midwestern states, Time reported.
Not to say businesses in those states haven’t been helped, just not the ones the PPP was designed to help, according to NBC. Shake Shack, a New York-based fast food company, is just one of a dozen companies with an annual revenue in the hundreds of millions that received money through the PPP, NBC reported.
Shake Shack applied for a loan through the PPP because it’s 189 individual locations employ less than 500 people each, according to NBC. The company received $10 million in loans from the program, NBC reported. On Sunday, Shake Shack executives issued a statement, saying they were returning the loan so it can go to restaurants that have a greater need, according to The Hill.
It’s difficult to pinpoint exactly why businesses in the Midwest have been more successful at getting the loans, according to Time. Small business owners had to apply for the loans through banks, which processed the loans and handed out the money, , Time reported.
Bankers in smaller Midwestern communities have more direct contact with the clients they serve, so they were able to identify their needs and help them prepare the loan applications early, Time reported. The bigger states, meanwhile, were enthralled in the coronavirus crisis and dealing with stay-at-home orders, Time reported.
The White House and Congress are getting closer to finishing negotiation over how to replenish the PPP fund, according to USA Today. The fund will include $300 billion this time around, after the initial fund was exhausted Thursday and the SBA stopped taking new applications, USA Today reported.
This story was originally published April 20, 2020 at 7:03 PM with the headline "Here’s why some states get more help than others from the Paycheck Protection Program."