United States: COVID-19 Small Business Loan Allocations Across US States

(8 May 2020) The US Government launched the Paycheck Protection Program (PPP) in early April to help small businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers. Between April 13 and May 1, $423 billion of loans (of the $669 billion target) were approved and distributed to the recipients.

Critics argue that the PPP distribution is uneven across states, pointing out that a disproportionate share of the money has headed to places where fewer people are sick, while small businesses in the worst-hit states, like New York and New Jersey, have not been able to access the fund at anywhere close to the same rates. 

• If you strictly consider the percentage of small businesses that received a loan, between 15% and 20% of small businesses in midwestern states, such as North Dakota, Nebraska, South Dakota, Iowa and Kansas, received the PPP loans. In California, Texas, and New York less than 10% received the loans.
• But looking at the percentage of small businesses that received PPP loans alone may distort the picture. The data also shows that each state received a roughly equal amount of PPP loans per person employed by a small business. Below we capture this data two ways: first, a comparison of the value of approved loans with the number of small businesses employees, and, second, the number of initial claims in the last six weeks relative to government loan disbursements.