COVID-19

SBA says PPP loans are getting smaller in the second round of lending

Justin Ho May 20, 2020
Heard on: Marketplace Morning Report
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The SBA's changes for the latest round of lending appear to be helping smaller businesses. Olivier Douliery/AFP via Getty Images
COVID-19

SBA says PPP loans are getting smaller in the second round of lending

Justin Ho May 20, 2020
The SBA's changes for the latest round of lending appear to be helping smaller businesses. Olivier Douliery/AFP via Getty Images
HTML EMBED:
COPY

The Small Business Administration just released new data on its Paycheck Protection Program. The SBA says it has approved over $510 billion in forgivable loans, which are meant to keep people on payrolls, over both rounds of the program.

The average loan size has been falling. After the first round of PPP loans ran out of money, on April 16, the SBA said the average loan size was over $200,000.

Now, that average has dropped to about $120,000.

“It was cut in half or more in every single state between rounds one and two,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.

He says the SBA made some changes after the second round started, such as temporarily giving smaller lenders exclusive access to the funds.

“So that allowed a lot of credit unions and other small lenders to get those applications that had been stacking up processed, Long said.

Smaller businesses with smaller loan requests had a lot of competition for loans in the first round, says Luke Wake, senior staff attorney with the National Federation of Independent Business.

“‘Bigger small businesses,’ those closer to the 500 employee mark, were snatching up those loans,” he said.

Wake says the falling average loan size is a sign that smaller businesses are finally getting loan approvals.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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