Independent verification of PPP loans yields mixed results


BUTTo evaluate the Small Business Administration’s Payroll Protection Program, Anna Serio, Commercial Loan Specialist at, came in handy: “Hopefully they have a better plan next time.”, an independent comparison platform and information service based in Manhattan, recently released a PPP analysis that, while generally positive, certainly needs improvement.

As of March 31, when the second and most recent round of PPPs ended, the SBA had approved approximately 11.8 million loans totaling just under $ 800 billion. (These totals include 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 has succeeded, with 55,612 loans approved, totaling about $ 3.2 billion.

Serio noted that most of the businesses that received PPP loans were indeed small businesses – which should have been, but not taken for granted. The loans were based on the cost of wages of the enterprise, with most applicants being allowed to borrow 2.5 times their average monthly wage value.

But, she added, about 50% of PPP funding went to loans of $ 150,000 or more, which means that 4.6% of businesses received more than half of the funds. And as you can see from the dollar amount, most of the money went to larger companies than the recipients were supposed to.

The headlines came up last summer when an initial $ 350 billion PPP ended in just two weeks and a few not-so-small businesses eventually got their PPP funds back. These include Shake Shack, a public company with 8,000 employees and 189 restaurants in the United States with a $ 10 million return, and Ruth’s Hospitality Group, which includes Ruth’s Chris Steakhouse and Mitchell’s Fish Market, with a $ 20 million return.

In both cases, networks were able to take advantage of a closed loophole that allowed any business with 500 or fewer employees in every location – not all – to apply.

“The SBA has never had a clear definition of what small business is,” Serio said. “He has always been more industry oriented. But by trying to be more inclusive with PPPs, they ended up becoming more exclusive. ”

She noted that the average loan size in Connecticut was $ 83,000 and the average company size was nine employees.

Another disappointment with the SBA’s PPP data, she said, has to do with the ethnicity of the applicants. Despite a new era that supposedly strives for equality across a range of categories, only 29% chose to reveal their ethnicity, with 13.7% identified as white, 12.4% as black and 2.4% as Asian.

Serio said that while the refusal to name their ethnicity was “a little surprising,” she believes the questionnaires were flawed. She noted that the original “Eskimo” was chosen instead of “Alaska Native” and “Puerto Rican”.

“This is nationality, not ethnicity,” she said.

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

“They never got it right,” she said. “They made changes to the very end. These were mostly good changes, but they only added confusion. This is not to say that it has ever been completely fixed.

When asked about the overall rating, Serio said: “The results were mixed. They have helped a large number of small businesses – out of 82% who applied in 2020, 77% received approval for all the funds they applied for. But I think that the grant program would have worked a little better than the forgivable loan program, which made it difficult and overwhelmed the staff. “

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