April 20, 2020; Forward
An April 13 report from the US Small Business Administration (SBA) Cares details where the (largely forgivable) Paycheck Protection Program loans from the CARES Act went, by geography and industry. While it only assesses $247,543,393,521 of the $349 billion made available, it provides a sense of the proportion of the loans made to various “industries,” including nonprofits, which we assume is covered primarily in the “Health Care and Social Assistance” line. This was the fourth-highest category both for numbers of loans given (114,236) and dollar amount ($27,907,315,755); overall, the category received 11.27 percent of the loans. Other categories where nonprofits may be represented include Educational Services (2.29 percent), Information (1.80 percent), and Arts, Entertainment and Recreation (1.49 percent).
The average loan size as reported here was $239,152. Nothing’s especially alarming about the distribution among the states. It is clearly the case, however, that not everyone has benefitted. According to the SBA, there are nearly six million businesses (5,934,985) that employ staff nationally, but only a little over one million businesses out of that first reported $247 billion tranche got funded. All told, based on the $349 billion total, Dalvin Brown in USA Today reports that 1.6 million businesses and nonprofits got the PPP loans/grants, meaning more than four million did not.
Already, Brown reports that a suit on behalf of unfunded small businesses in California has been filed against Wells Fargo. The suit claims that “Wells Fargo unfairly prioritized businesses seeking large loan amounts, while the government’s small business agency has said that PPP loan applications would be processed on a first-come, first-served basis,” allegedly enabling the company to collect millions more in processing fees. Brown adds that “The filing against Wells Fargo is one in a series of lawsuits lodged against big banks on behalf of small businesses late Sunday.”
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Overall, however, small businesses have benefitted. Reportedly, loans of more than $5 million comprised only 9.2 percent of the amount awarded, and only 0.32 percent of those receiving loans. Perhaps this (and some public shaming) is what sparked Shake Shack to decide the $10 million loan it had been awarded was better used elsewhere. It declared today it would give its loan back, releasing a statement saying it had been able to secure funds from other sources (having just raised $150 million in private equity) and rethought its position after seeing the fund run out in 13 days.
Other restaurant chains named in this article have not yet followed suit. Let’s hope, given the history of such stuff, that it goes back to the PPP fund and not the general treasury.
And of course, we remain eager to hear your stories. Did your nonprofit get a loan? Were you unable to do so? Please let us know your story, your sector, and your circumstances—and how the program is working for you. We’ll keep your information confidential, but your stories will definitely help inform our coverage.—Ruth McCambridge