By Yuka Hayashi, Anthony DeBarros and Ryan Tracy
WASHINGTON -- The government's $670 billion Paycheck Protection
Program reached a wide swath of small businesses across almost
every sector of the economy, benefiting hard-hit industries such as
hotels and restaurants, as well as professional firms and
construction companies that were better able to weather the crisis,
new data shows.
More than 90 industry sectors each had more than 10,000 firms
approved for PPP loans, according to a Wall Street Journal analysis
of data from the Small Business Administration, which ran the
program. About 264,000 companies in the restaurant business got PPP
money, topping the list.
The next highest sectors were personal care services;
consultants specializing in management, science or technology; and
legal services. Those three saw between 134,000 and 153,000
companies approved for loans.
The analysis also showed that many of the recipients of large
loans worth at least $2 million were in sectors that avoided
significant impact from the coronavirus pandemic and were able to
have their employees work remotely, such as architectural and
engineering, legal services and computer system design.
Take computer system design and related services, which lost
4.5% of jobs from January to June. Firms in the sector received 803
PPP loans worth at least $2 million.
In contrast, the hotel and accommodation sector, with a similar
number of jobs before the crisis, lost 38% of them from January to
June. The sector received 513 PPP loans of at least $2 million.
Recipients of PPP loans in the hotel business said the program
helped to retain 980,890 jobs, while the recipients in the computer
system design sector said 589,532 jobs were retained, according to
the Journal analysis.
The data showed for the first time how many jobs each business
reported retaining with the help of PPP funds. In all, the number
of jobs claimed by the reporting businesses totaled more than 51
million.
Whether that means the program actually saved 51 million jobs is
less clear, said Eric Zwick, a professor of finance at the
University of Chicago.
"We don't know what the firm would have done in the absence of
the funding," he said. "A lot of firms who got this funding were
only a little bit impacted in terms of revenues during the crisis
and probably wouldn't have changed their head count that much."
In a recent paper analyzing the first phase of the PPP through
late April, Prof. Zwick and his colleagues concluded they "do not
find evidence that the PPP had a substantial effect on
employment."
The U.S. unemployment rate jumped to a post-Great Depression
high of 14.7% in April. It has since fallen to 11.1% in June, still
sharply above 3.5% in February, the Labor Department said last
week.
More than 110 industry sectors reported retaining at least
100,000 jobs with the PPP funds, according to the Journal analysis.
The restaurant industry reported retaining about 5.5 million jobs,
the most of any sector.
The Journal's analysis looked at data using more general sector
categories than the ones reported by the SBA. A total of about 4.9
million companies have received loans under the program.
After restaurants, the next two highest sectors were physicians'
offices and building equipment contractors, which retained 1.29
million jobs and 1.26 million jobs, respectively.
The Journal analysis shows that about 878,000 borrowers either
didn't indicate the number of jobs retained using PPP funds, or
reported retaining zero employees.
An SBA spokesman said businesses didn't necessarily have to
provide the number of employees to obtain a loan, but that number
would be required when they apply for loan forgiveness.
There was also evidence that larger firms were better able to
navigate the program in its early days, when panic about the
pandemic was at its height. Almost all of the companies receiving
loans of between $5 million and $10 million, the maximum allowed in
the program, were approved for their loan in April, according to
the Journal analysis.
By comparison, 60% of all loans were approved in April, after
the program began accepting applications on April 3. Most smaller
loans, those of less than $150,000, were approved starting April
27, when a second round of funding began. Congress recently
extended the deadline to Aug. 8, and it had more than $130 billion
still available as of June 30.
The Trump administration, which released data on PPP borrowers
this week under congressional pressure, says the total amount of
PPP loans added up to at least 72% of small businesses' payroll in
every U.S. state. Florida topped the list, with small business
loans accounting for 96% of small businesses' payroll.
The SBA also concluded that 27% of PPP funds were distributed to
low and moderate income census tracts, in line with the 28% of
Americans who live in those areas. About 23% of the funds went to
small businesses in areas that the SBA considers economically
distressed, and 15% of the funds went to rural areas.
"The top line data demonstrates that those small businesses that
were able to access PPP loans were spread across the small business
ecosystem, with loan amounts of various sizes and diverse income
communities represented," said Karen Kerrigan, chief executive of
Small Business & Entrepreneurship Council, in a statement. "The
average loan size of $106,744 is a good indication that very small
firms also benefited from the program."
One industry that saw a big boost from the program while
weathering the pandemic relatively well was professional,
scientific and technical services, which included sectors like
architectural and engineering, legal services and computer systems
design.
That industry was the second-largest recipient of PPP loan
dollars after health care and social assistance, receiving loans
worth $66.43 billion, or nearly 13% of all funds. Meanwhile,
accommodation and food services, by far the largest victim of the
pandemic measured by job losses, received $42.1 billion.
Those numbers translate to roughly $12,500 per employee in the
professional services sector, where many of the workers are highly
paid, compared with $4,800 for accommodation and food services,
according to an analysis by Lawrence Schmidt, assistant professor
of finance at MIT Sloan School of Management, and Dimitris
Papanikolaou, finance professor at Northwestern University's
Kellogg School of Management.
And professional services is the industry where the ratio of
workers who can work remotely is highest, the professors found. For
example, 78% of computer programmers say they can telecommute,
while workers in accommodation and food services or transportation
must nearly always be physically present at their workplace.
"Since higher-paid employees are more likely to be able to work
remotely, tying financing to payroll expenses had the [likely
unintended] consequences of allocating more federal funds to the
least affected sector," Profs. Schmidt and Papanikolaou wrote.
--Chad Day contributed to this article.
Write to Yuka Hayashi at yuka.hayashi@wsj.com and Ryan Tracy at
ryan.tracy@wsj.com
(END) Dow Jones Newswires
July 07, 2020 17:45 ET (21:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.