Velocity of Lending
Over $500 billion of funds have been disbursed in only a couple months. This is particularly massive, considering that the SBA lent $28 billion in all of 2019. As we can see in this graph, the program experienced 2 distinct surges in volume, with over $200 billion approved in the first 10 days.
Paycheck Protection Across the U.S.
Given the stated goal of funding job retention, it is interesting to see the ‘cost’ per job by state. As we can see, this varies widely. In Virginia, $13,606 was lent for every claimed job retained, whereas this number drops to $7,050 for Utah.
Paycheck Protection by Industry
It’s no surprise that jobs in some industries cost more to retain than others. In the Mining/Extraction industry, $16,902 was lent for every claimed job retained, whereas this figure was only $6,122 in Accommodation and Food Services.
Mix Effect: Construction Job Retention Cost by State
Some of the disparity in cost per job at a state or industry level is presumably driven by ‘mix effect’. To mitigate this, we can look at a single industry by state – in this case, Construction. As we can see, the effect is pronounced even within an industry, with $20,066 lent for every claimed job saved in WA vs. $8,577 in the state of Utah.
State-Wise Industry Distribution
The prevalence of various business types predictably differs by geography. In the graph below, we see the percentage of state-level funding going to particular industry categories. In Iowa, 19.2% of funding went to Agriculture, while in NY, 15.3% went to Professional Services.
Race for Relief: Bank Leaderboards Over Time
As the PPP began, lenders raced to get up to speed, often with unclear and frequently changing guidance. The task was made more difficult by the non-standard operational and documentation processes that needed to be quickly established, particularly as banks were adapting to remote work. As we can see, some institutions were able to scale their volume much more rapidly than others, and the rankings shifted greatly during the 2 major ‘surge’ periods.
During the duration of the PPP program, the sizes of the loans shifted dramatically. In early weeks, much of the funding went to larger businesses in larger quantities, prompting criticism that the program was not set up to support the smaller businesses most in need of aid. In later weeks, the mix shifted to smaller firms, as more lenders ramped up on the program and operational solutions were implemented to streamline the collection and processing of documentation.
Loans by Industry Over Time
Funding granted through the PPP is distributed across a broad range of industries. Interestingly, the mix did not change massively over the course of the program.
Do Larger Loans Save More Jobs
As we can see in the graph below, businesses receiving larger loans claimed correspondingly higher job retention. Whether the job savings truly materialized will be seen in the coming months, particularly as forgiveness requests are documented and processed.
Fintech vs. Big Banks
The unprecedented and rapid nature of the pandemic and its financial implications provided an opportunity for fintech lenders to shine. With greater automation and ability to rapidly implement new processes, lenders such as Square, Bluevine, Kabbage worked with fintech-enabling banks to disburse significant capital to businesses, often to smaller and more vulnerable firms. In the graph below, we can see the median loan amount for three prominent fintech-enabling banks as well as several large, well-known retail banks. It does appear that the fintech lenders were able to reach a portion of the market not typically served by large banks.