Brown on Business
July 13-19, 2020
SBA’s mammoth data dump on PPP loan program reveals COVID-19 tales for nearly 30,000 Arkansas businesses
By Wesley Brown
wesley@dailydata.com
Wow!
That is about all I can say after I downloaded out the huge data dump by the U.S. Treasury and Small Business Administration concerning the popular Paycheck Protection Program (PPP) on Monday, July 7.
According to U.S. Treasury Secretary Steve Mnuchin, the detailed loan-level disclosure covers every one of the 4.9 million PPP loans that have been made totaling $521 billion. Although the application deadline was supposed to close on June 30 for the centerpiece program in the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, Congress on July 2 decided to extend the program. The new Aug. 8 deadline gives Arkansas businesses another five weeks to apply for $130 billion in unobligated funds.
“The PPP is providing much-needed relief to millions of American small businesses, supporting more than 51 million jobs and over 80% of all small business employees, who are the drivers of economic growth in our country,” Mnuchin said in statement. “[The] release of loan data strikes the appropriate balance of providing the American people with transparency, while protecting sensitive payroll and personal income information of small businesses, sole proprietors, and independent contractors.”
As noted by Mnuchin, Monday’s mountainous information download includes reams of loan-level data, including business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, and jobs supported.
The SBA data offers loan amounts for all 50 states and the District of Columbia, categorized from $5-10 million for the highest amounts and $150,000-$350,000 on the low end. In between, the loan range includes those companies and nonprofits that received COVID-19 emergency funding between $2-5 million and $1-2 million. For all loans below $150,000, SBA is releasing all the above information except for business names and addresses.
The SBA spreadsheet further provides information regarding the sizes of participating lenders, ranging from Wall Street, regional and community banks to minority depository institutions, CDFIs and fintech firms. Loan data also includes the reach of the program in underserved and rural communities, as well as participation by religious, grantmaking, civil, professional, and other similar organizations.
Due to the popularity of the PPP initiative, Congress on July 2 overwhelmingly extended the original June 30 deadline to accept applications at the behest of business trade groups across the country. The new deadline to apply for a PPP loan is now Aug. 8, giving Arkansas businesses another month to get access much-needed capital to remain in operation as COVID-19 cases continue to spike.
At the end of the original deadline, SBA’s District Office in Little Rock had processed a whopping $3.3 billion in PPP loans that were made to 42,427 businesses across the state. The average PPP loan was a tidy $78,246, keeping some 375,741 Arkansas jobs off unemployment rolls, according to Edward Haddock, SBA’s top Arkansas official.
As noted in earlier Daily Record reports, the PPP program got off to a rocky start during the first round of the $349 billion CARES Act emergency relief fund to provide forgivable loans up to $10 million to small businesses left financially distressed by the coronavirus pandemic. Those loans, however, were depleted after only two weeks after a national network of banks, credit unions and other lenders began accepting applications on April 3.
In Arkansas, more than 100 banks and lenders processed the first two rounds of PPP loans, according to the SBA’s District Office in Little Rock. Under CARES Acts rules, the loans were provided to small businesses without collateral requirements, personal guarantees, SBA fees, or credit elsewhere tests. Supposedly, the program was aimed at mom-and-pop small businesses, certain non-profits, veterans’ organizations, self-employed individuals, independent contractors, and other businesses with fewer than 500 employees.
Yet exactly two weeks after the program’s highly anticipated launch, SBA Administrator Jovita Carranza and Mnuchin hailed the PPP as a national success despite technical delays and snafus that created application backlogs at SBA district offices nationwide, including Arkansas.
Some small business advocates in Arkansas complained possibly thousands of applications by sole proprietors, independent contractors, nonprofits and other self-employed “1099” entities were held up by SBA lenders in the first few weeks due to confusion over a late guidance by SBA.
By that time, however, SBA officials had explicitly stated that nearly all the $350 billion in PPP funds were gone. Locally, SBA officials sent out a notice to Arkansas banks, lending partners, clients, local and state policymakers, and others on April 17 that PPP funds had completely dried up.
“The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible. We want every eligible small business to participate and get the resources they need. SBA is communicating with Congress to request additional appropriations,” said Haddock. “Unfortunately, the SBA cannot issue new loan approvals or accept new applications given this lapse in appropriations per U.S. law.”
At the time, National Federation of Independent Business (NFIB) officials grumbled that 90% of its members surveyed in all 50 states last week said they were unable to secure loans in the first round of PPP funding. Also, class action lawsuits in California claimed that the nation’s four largest lenders involved in the PPP program, JPMorgan, Bank of America, Wells Fargo and USBank, rigged the loan process to benefit their bottom line to the tune of nearly $6 billion in commission and fees.
According to federal complaints, instead of a “first-come, first-served” application process after the PPP program was launched on April 3, many banks processed the biggest loan amounts first because of profitable origination fees. That method left more than 90% of the small businesses still in the SBA’s queue once funds were depleted, the complaint said.
On April 23, Congress overwhelmingly approved an extra $500 billion in CARES Act stimulus funding, including an additional $310 million to replenish the PPP fund. By all accounts, the second round of funding that began on April 28 has gone a lot smoother as the U.S. Treasury reported July 6 that 650,000 businesses across the U.S. got an average of $150,000 to keep their doors opens.
Among the nearly more than 42,000 Arkansas entries, you will find 19 Arkansas businesses and nonprofits that received the highest loan amounts between $5 million and $10 million. Some of those businesses, such as J.A. Riggs and Arkansas Hospice of Little Rock, are familiar names to most. Other names like Incite Rehab of Conway and SGOH Acquisition of Gravette, are not.
Other names on the Arkansas list include industry stalwarts like Intimidator Inc. of Batesville, the maker of Bad Boy lawnmowers, and Welspun Pipes Inc. of Little Rock, the American subsidiary of the Mumbai, India pipeline conglomerate of the same name. The PPP funds accessed by those two companies saved 266 and 500 Arkansas jobs, respectively, they said.
Any person with ample time to download the SBA file can review the other 42,408 of PPP entries for just Arkansas alone, finding hundreds of other familiar business names, some unknowns and others that may push the definition of a true small business.
In the coming days, reporters like me will be contacting many of those Arkansas companies to ask pertinent questions to learn the COVID-19 related story behind those loans. Stay tune – that should be interesting too.
