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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
Heard on:
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

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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