Independent review of PPP loans shows mixed results



AAsked to evaluate the Small Business Administration’s Paycheck Protection Program, Anna Serio, Commercial Credit Officer at, is very specific: “I hope they have a better plan if there is. an other time “., an independent comparison platform and Manhattan-based news service, recently released an analysis of the PPP which, while generally positive, is certainly showing room for improvement.

As of March 31, when the second and final PPP round ended, the SBA had approved around 11.8 million loans for a total of just under $ 800 billion. (These totals include the nearly 6.7 million loans approved for $ 277.7 million between January 1 and May 31, 2021.)

Texas, California, Florida and New York received the most funds and the most loans, due to the size of their economies. But Connecticut did well, with 55,612 loans approved totaling about $ 3.2 billion.

Serio noted that the majority of businesses that received PPP loans were actually small businesses – something that should be, but was not, self-evident. The loans were based on a company’s salary costs, with most applicants allowed to borrow 2.5 times its average monthly salary cost.

But, she added, nearly 50% of P3 funding went to loans of $ 150,000 or more, meaning 4.6% of companies received more than half of the funds. And, as evidenced by the dollar amount, most of the money went to larger companies than what appears to have been the intended recipients.

Headlines grabbed the headlines last summer when the initial $ 350 billion in PPP ran out in just two weeks, with several not-so-small companies finally returning their PPP funds. These included Shake Shack, a publicly traded company with 8,000 employees and 189 restaurants in the United States, grossing $ 10 million, and Ruth’s Hospitality Group, which includes the chains Ruth’s Chris Steakhouse and Mitchell’s Fish Market, returning 20 million. of dollars.

In both cases, chains were able to take advantage of a since-closed loophole that has allowed any business with 500 or fewer employees per location – not in total – to apply.

“The SBA has never had precise, precise definitions of what a ‘small business‘ is,” Serio said. “It has always been more industry-based. But in trying to be more inclusive with PPP, they ended up being more exclusive. “

The average loan size in Connecticut was $ 83,000, with the average business size of nine employees, she noted.

Another disappointment with the SBA’s PPP data, she said, concerned the ethnicity of the candidates. Despite a new era that purportedly strives for fairness in a number of categories, only 29% chose to disclose their ethnicity, with 13.7% identifying as White, 12.4% as Black and 2.4%. like Asians.

Serio said that although the refusal to identify their ethnicity was “a bit of a surprise”, she believed the questionnaires were flawed. She noted that originally the choices included the old “Eskimo” instead of “Alaska Native” and “Puerto Rican”.

“It’s a nationality, not an ethnicity,” she said.

And despite remarks from some SBA officials that the initial PPP issues were quickly resolved, Serio said she was not convinced.

“They never really fixed everything,” she said. “They made changes until the very end. These were mostly good changes, but it only added to the confusion. You can’t really say that it was never completely repaired.

When asked for an overall rating, Serio said, “The results have been mixed. They’ve helped a lot of small businesses – of the 82% who applied in 2020, 77% were approved for all the funds they requested. But I think a grant program would have worked a little better than a forgivable loan program, which complicated them and overburdened their staff.


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