A study by the Federal Reserve finds that proportionately, forgivable loans via the Small Business Administration’s Paycheck Protection Program went to areas with more bank customers, and not necessarily to small businesses in areas most intensely affected by the coronavirus pandemic.
“In New York, the epicenter of the coronavirus in the United States, less than 20 percent of small businesses have been approved to receive PPP loans. In contrast, more than 55 percent of small businesses in Nebraska are expecting PPP funding,” wrote Haoyang Liu and Desi Volker, two economists at the Federal Reserve Bank of New York.
New Jersey, Michigan and Pennsylvania are also getting fewer loans than some Mountain and Midwest states on a per-small-business basis.
The study shows a negative relationship between coronavirus cases per capita and the share of small firms getting PPP funding and no statistically significant relationship between economic hardship due to COVID-19 and the chance of getting a PPP loan.
The report looked at the first round of PPP issued from April 3 to 16. The federal CARES Act allotted $349 billion in funding in the first round. Another bill passed at the end of April earmarked $310 billion for PPP loans.
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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