Where the Small-Business Relief Loans Have Gone
Total value of loans per small-
business employee in each state
$2.7
$6.0
$7.0
$7.5
$8.1
Thousands
of dollars
N.D.
$8.1
Minn.
$7.8
Mass.
$7.7
Neb.
$7.8
Ill.
$7.7
W.Va.
$2.7
Colo.
$8.0
Kan.
$7.5
Calif.
$7.6
N.C. $6.0
Ark.
$5.7
N.M.
$5.6
S.C.
$5.8
Miss.
$5.9
Total value of loans per small-business employee in each state
$2.7
$6.0
$7.0
$7.5
$8.1
$7.2
Thousands of dollars
$7.0
N.D.
$8.1
$6.4
Minn.
$7.8
$6.5
$6.4
$6.7
$7.1
Mass.
$7.7
$7.1
$7.1
$6.8
6.9
$7.3
$6.9
$6.2
$6.1
$7.0
Neb.
$7.8
$7.4
$6.5
$6.9
$6.1
Ill.
$7.7
$5.1
$7.5
$6.6
W.Va.
$2.7
Colo.
$8.0
Calif.
$7.6
Kan.
$7.5
$6.9
$7.0
$6.3
N.C. $6.0
$6.5
$6.9
Ark.
$5.7
$7.0
S.C.
$5.8
N.M.
$5.6
$6.6
$7.0
Miss.
$5.9
$7.3
$6.6
$7.3
$6.7
$7.4
Total value of loans per small-business employee in each state
$7,230
$2,700
$6,000
$7,000
$7,500
$8,100
$7,010
N.D.
$8,120
$6,400
Minn.
$7,830
$6,490
$6,390
$6,710
$7,070
Mass.
$7,120
$7,150
$7,670
$6,820
$7,300
$6,870
$6,900
$6,200
$6,120
$6,950
Neb.
$7,770
$7,390
$6,550
$6,880
$6,110
Ill.
$7,680
$5,100
$7,500
$6,580
Colo.
$7,960
W.Va.
$2,710
Calif.
$7,590
Kan.
$7,520
$6,900
$6,960
$6,310
N.C.
$5,980
$6,520
$6,860
Ark.
$5,680
$6,950
S.C.
$5,810
N.M.
$5,560
$6,640
$6,950
Miss.
$5,860
$7,340
$6,550
$7,320
$6,670
$7,410
A centerpiece of the federal government’s economic relief plan is to provide billions in forgivable loans to small businesses struggling during the coronavirus pandemic.
But analyses of government data show that the lending program, which is overseen by the Small Business Administration, allowed many of the earliest funds to go to parts of the country that were not as hard hit by the coronavirus, as well as to a small number of companies seeking millions in assistance.
Midwestern businesses got an outsize share during the first lending round.
Total value of loans per small-
business employee in each state
1st round
2nd round
$1.8
3.5
4.7
5.5
7.0
$0.8
1.4
2.4
3.0
4.7
In thousands of dollars
Total value of loans per small-business employee in each state
1st round
2nd round
$1,800
$3,500
$4,700
$5,500
$7,000
$800
$1,400
$2,350
$3,000
$4,700
Wash.
N.D.
Ore.
N.Y.
Wisc.
Minn.
Conn.
Iowa
Neb.
N.J.
Nev.
Kan.
Calif.
Okla.
Ariz.
Fla.
Hawaii
Total value of loans per small-business employee in each state
1st round
2nd round
$1,800
$3,500
$4,700
$5,500
$7,000
$800
$1,400
$2,350
$3,000
$4,700
Wash.
Wash.
Me.
Minn.
Vt.
Mont.
N.D.
N.D.
Ore.
Ore.
N.Y.
Wisc.
Wis.
N.Y.
SD.
Conn.
N.J.
Iowa
Iowa
Neb.
Neb.
N.J.
Nev.
Del.
Nev.
Md.
W.Va.
W.Va.
Kan.
Kan.
Calif.
Calif.
N.C.
Okla.
Ariz.
Okla.
Ariz.
N.M.
S.C.
Ark.
Fla.
Hawaii
The country’s largest banks are often heavy lenders to small businesses, but during the first of the program’s two rounds, community banks and regional institutions did most of the lending, according to an analysis by a group of University of Chicago and M.I.T. economists.
That contributed to a disproportionately large share of loans going to areas that were not as hard-hit by the virus.
Businesses in Iowa, Nebraska and North Dakota were among the biggest beneficiaries of the early aid when accounting for the number of people working for small businesses in each state, a Times analysis shows. All three states are below the national median for cases of the virus per capita, and none imposed statewide lockdowns as the outbreak began to spread nationwide.
One reason for the uneven distribution is because big banks were slow to lend when the program first began, in part because of bureaucratic delays, and they imposed rules that blocked many people seeking help. The 20 largest banks accounted for 41 percent of small-business lending throughout the country before the pandemic, but issued only 20 percent of the first-round loans, the Chicago and M.I.T. economists found.
Since then, big banks made vastly more loans. Businesses in harder-hit states like California and New York have claimed a larger share of the money so far in the second round, which started in late April after Congress approved a fresh round of funds when money quickly ran out during the initial wave.
Many small loans were recently issued, but loans worth more than $1 million made up a large share of the early money handed out.
1st round
Size of loans
70%
Share of loans in the round
UP TO
$150,000
15%
Number of loans
15%
$150,000
TO $350,000
Value of total loans
14%
10%
$350,000
TO $1 MILLION
24%
5%
OVER
$1 MILLION
47%
2nd round
90%
UP TO
$150,000
37%
6%
$150,000
TO $350,000
17%
3%
$350,000
TO $1 MILLION
19%
1%
OVER
$1 MILLION
27%
1st round
Size of loans
70%
Share of loans in the round
UP TO
$150,000
15%
15%
$150,000
TO $350,000
Number of loans
14%
Value of total loans
10%
$350,000
TO $1 MILLION
24%
5%
OVER
$1 MILLION
47%
2nd round
90%
UP TO
$150,000
37%
6%
$150,000
TO $350,000
17%
3%
$350,000
TO $1 MILLION
19%
1%
OVER
$1 MILLION
27%
Loans of more than $1 million made up just 5 percent of those approved in the first round, but they accounted for roughly half of the overall money. That favored large companies seeking greater sums.
Many of those companies already had deep relationships with their banks, which helped them get to the front of the line, and some banks prioritized their most lucrative customers. More than 300 public companies disclosed receiving the loans, though many have since returned the money after a growing backlash.
Scrutiny over the program prompted officials to impose new eligibility rules for companies. Lending has since shifted toward smaller amounts, suggesting smaller businesses were benefiting from the assistance. In the first round, the average loan size was $206,000, according to the S.B.A. After one week of the second round, it was $79,000.
Small businesses employ roughly half of the country’s nongovernment workers, and most have under 100 employees.
Share of U.S. employment by company size
NUMBER
OF EMPLOYEES:
1-4
5%
5-9
5%
10 - 19
7%
Small
businesses
52%
20 - 49
10%
50 - 99
8%
100 - 249
10%
250 - 499
7%
500 - 999
7%
Large
businesses
48%
1,000
or more
41%
Share of U.S. employment by company size
NUMBER OF EMPLOYEES:
100-
249
250-
499
500-
999
1-4
5-9
10-19
20-49
50-99
1,000 or more
7%
41%
5%
5%
7%
10%
8%
10%
7%
Large businesses
Small businesses
48%
52%
Share of U.S. employment by company size
NUMBER OF EMPLOYEES:
1-4
5-9
10-19
20-49
50-99
100-249
250-499
500-999
1,000 or more
5%
5%
7%
10%
8%
10%
7%
7%
41%
Large businesses
Small businesses
48%
52%
The government generally defines a small business as one that has up to 500 employees. In 2016, the last year for which the government has released annual estimates, there were nearly 31 million small businesses operating in the United States, employing almost 60 million workers.
Employees of small businesses,
in thousands
161
199
4,106
131
2,498
188
7,129
4,707
3,398
141
Employees of small businesses, in thousands
1,380
289
199
245
161
1,255
296
853
4,106
1,490
1,259
316
211
1,869
230
131
750
2,498
1,810
652
412
2,193
2,486
1,143
188
487
1,222
1,117
573
1,535
559
1,169
7,129
604
702
1,672
1,096
1,039
713
490
335
795
1,638
789
440
4,707
903
3,398
141
275
Employees of small businesses
1,379,600
289,200
245,400
199,000
161,100
1,255,000
295,900
853,000
4,106,100
1,258,900
315,800
1,490,400
210,500
1,868,900
230,000
131,500
750,500
2,497,500
1,810,100
651,600
412,300
487,400
2,192,900
2,485,900
187,600
1,143,200
1,222,400
1,117,200
572,900
7,129,200
1,535,100
558,900
1,168,700
604,200
702,100
1,672,100
1,096,200
1,039,200
712,600
334,900
490,500
794,700
440,400
1,637,900
789,400
4,706,900
902,800
3,397,900
141,100
275,100
The stimulus program was created to help businesses pay their workers for an eight-week period in April, May or June. Applicants did not have to prove a sharp drop in sales or other specific harm. They simply had to certify that “current economic uncertainty makes this loan request necessary” to support their operations.
But many of the most devastated businesses — like restaurants and service providers — have already laid off workers and are uncertain when their sales will return. Because the program’s rules require companies to maintain their head count at pre-pandemic levels (those that cut positions have a brief window to rehire) if they want their loans forgiven, those businesses have a much harder time taking advantage of the program than companies that still have their full work force intact.
In effect, the Chicago and M.I.T. economists argued, the early stages of the program “functioned less as social insurance to support the hardest hit areas” and more as a cash infusion “for less affected firms.”