COVID-19

Coastal states win greater share of PPP’s second round

Justin Ho May 8, 2020
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A shuttered restaurant in Los Angeles. Coastal states fared better in the second round of Paycheck Protection Program funding. Frederic J. Brown/AFP via Getty Images
COVID-19

Coastal states win greater share of PPP’s second round

Justin Ho May 8, 2020
A shuttered restaurant in Los Angeles. Coastal states fared better in the second round of Paycheck Protection Program funding. Frederic J. Brown/AFP via Getty Images
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When the first round of the Paycheck Protection Program ended, we reported that different parts of the country saw very different success rates in getting loans approved. Now, we’re learning more about how the second round of funding is shaping up, and it’s pretty clear that the states that did worst in round one are seeing success in round two.

During the first round of the PPP, Alexandra Mason had a hard time getting a loan. She runs a marketing consultancy in Washington, D.C. One bank rejected her application. Another approved the request but never sent the money. But after round two kicked off last week, she applied again.

“Within three days, including a weekend, my approval came through and was funded,” Mason said.

As of May 1, Washington, D.C.; New York, New Jersey and California are getting greater shares of loan approvals, relative to their shares of the U.S. population.

John Kabateck, California state director of the National Federation of Independent Business, said those states benefited from new guidance favoring applications from smaller companies.

“Too much of this money was going out to businesses that needed it less,” Kabateck said.

Customers in those states are also more likely to bank with larger institutions, according to Ernie Tedeschi, an economist with Evercore ISI.

In the first round of funding, that was a disadvantage, since community banks in rural states saw the most success. But the second is different.

“That trend has been reversed a little bit,” Tedeschi said.

Bigger banks had more advantages in the second round, like the option to upload applications in bulk. Tedeschi said banks in coastal states likely had time to process loans after the first round of funding ran dry.

“You know, sorta finalizing applications and getting them ready for the eventuality of more appropriations coming,” Tedeschi said.

The Small Business Administration says 53% of approved dollars in the second round came from banks with more than $50 billion in assets.

COVID-19 Economy FAQs

When does the expanded COVID-19 unemployment insurance run out?

The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.

Which states are reopening?

Many states have started to relax the restrictions put in place in order to slow the spread of COVID-19. Although social-distancing measures still hold virtually everywhere in the country, more than half of states have started to phase out stay-at-home orders and phase in business reopenings. Others, like New York, are on slower timelines.

Is it worth applying for a job right now?

It never hurts to look, but as unemployment reaches levels last seen during the Great Depression and most available jobs are in places that carry risks like the supermarket or warehouses, it isn’t a bad idea to sit tight either, if you can.

You can find answers to more questions here.

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