Upper Midwest, Great Plains states have fared best in SBA emergency loan program

Justin Ho Apr 23, 2020
With the coronavirus closing many businesses, the Paycheck Protection Program saved millions of jobs that would have been lost, according to MIT research. Justin Sullivan/Getty Images

Upper Midwest, Great Plains states have fared best in SBA emergency loan program

Justin Ho Apr 23, 2020
With the coronavirus closing many businesses, the Paycheck Protection Program saved millions of jobs that would have been lost, according to MIT research. Justin Sullivan/Getty Images

The House is weighing a new round of $320 billion in funding for the Paycheck Protection Program emergency loans for small businesses after the Senate approved the measure on Tuesday.

The first round ran out of its $350 billion appropriation last week.

Data from that first round suggest states in the Great Plains and upper Midwest had the most success in securing the program’s emergency loans.

According to data from the Small Business Administration, states with smaller populations tended to secure more loan money per capita than more populous coastal states. States in the Great Plains and upper Midwest received higher shares of the PPP loan pool than their shares of the total U.S. population.

RankStateShare of total approved PPP dollarsShare of U.S. populationRatio
Source: Small Business Administration, U.S. Census 2019 National and State Population Estimates

Bankers say close relationships between businesses and bankers in states with relatively small populations made the program easier to administer. 

On the day the loan program kicked off in early April, Jennifer Davidson sent an email to the bank that works with the financial literacy nonprofit she runs in Lincoln, Nebraska. The email contained the PPP application form, printouts of payroll expenses, and other documents. 

About a week later, the $30,000 loan was approved. The money showed up in her nonprofit’s bank account the next day.

“It was so easy,” Davidson said. “I didn’t see anyone in person at all. It was all 100% online.”

Davidson’s experience was far from universal. Many businesses interviewed by Marketplace reported trouble applying for PPP loans because they didn’t have close relationships with banks.

Davidson has a close relationship with her bank. She says that’s just how things are done in Nebraska.

“We know our bankers,” Davidson said. “It’s just less populous.”

That close relationship helped bankers guide their clients through the necessary paperwork to quickly apply for the emergency loans.

“That helped the Midwestern banks specifically,” said Eric Hallman, president and CEO of the Nebraska Independent Community Bankers.

RankStateLoans per 1,000 population
Source: SBA / U.S. Census

There was also less competition for loans in the Great Plains and upper Midwest.

The San Diego-based Bank of Southern California issued about 950 loans before the first round of funding ran out. Nathan Rogge, the bank’s president and CEO, said that’s a small number, given that California’s the most populous state in the union.

“It just put a lot of strain, and I think that translated into fewer people getting access to the program,” Rogge said.

Industries in the Great Plains and Upper Midwest have also experienced their fair share of catastrophe in recent years. Drastic flooding in the region last year and the pressures of the trade war have taken a toll on the heavily agricultural economy there.

As a result, agricultural, food processing and transportation industries are more familiar with the process of applying for government aid, said Scott Fuess, an economics professor at the University of Nebraska-Lincoln.

“Recognizing another stress coming along, [those businesses] were quick to reach out for the relief that this program offers,” Fuess said.

Plus, Fuess said banks in the region have plenty of experience with the roller-coaster economics of farming.

COVID-19 Economy FAQs

What does the unemployment picture look like?

It depends on where you live. The national unemployment rate has fallen from nearly 15% in April down to 8.4% percent last month. That number, however, masks some big differences in how states are recovering from the huge job losses resulting from the pandemic. Nevada, Hawaii, California and New York have unemployment rates ranging from 11% to more than 13%. Unemployment rates in Idaho, Nebraska, South Dakota and Vermont have now fallen below 5%.

Will it work to fine people who refuse to wear a mask?

Travelers in the New York City transit system are subject to $50 fines for not wearing masks. It’s one of many jurisdictions imposing financial penalties: It’s $220 in Singapore, $130 in the United Kingdom and a whopping $400 in Glendale, California. And losses loom larger than gains, behavioral scientists say. So that principle suggests that for policymakers trying to nudge people’s public behavior, it may be better to take away than to give.

How are restaurants recovering?

Nearly 100,000 restaurants are closed either permanently or for the long term — nearly 1 in 6, according to a new survey by the National Restaurant Association. Almost 4.5 million jobs still haven’t come back. Some restaurants have been able to get by on innovation, focusing on delivery, selling meal or cocktail kits, dining outside — though that option that will disappear in northern states as temperatures fall. But however you slice it, one analyst said, the United States will end the year with fewer restaurants than it began with. And it’s the larger chains that are more likely to survive.

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