United States / Coronavirus Insights
Paycheck Protection Program Distribution and Analysis

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by Dan Spitzer, Industry Research Analyst
Apr 20 2020

As millions of businesses around the United States continue to struggle to survive in the COVID-19 (coronavirus) climate, the Paycheck Protection Program (PPP) has offered a temporary lifeline. The PPP was established under the $2.0 trillion stimulus bill passed in March which allocated $349.0 billion to provide forgivable loans to businesses. As of April 16th, the Small Business Administration (SBA) which runs the PPP, approved just over 1.6 million loans totaling more than $342.0 billion. Additionally, the average loan size stands at $206,000, with the majority of loans ranging between $350,000 and $1 million. Due to its high demand, the PPP has been rapidly depleted, forcing lawmakers to allocate additional funds.

While states with higher populations received proportionally higher loan amounts, certain industry sectors received a majority of the loans. The construction, professional/scientific/technical services, manufacturing and health care and social assistance sectors combined, received nearly half of the original $349.0 billion allocation, with construction being the highest. One possibility as to why the construction sector received the highest proportion of loans is due to its large labor force. IBISWorld report Construction in the United States (23), estimates the sector to employ nearly 9.5 million workers in 2020.  This would make sense as part of the PPP requires businesses to spend at least 75.0% of their loans on payroll costs. However, the manufacturing sector (31-33) is estimated to employ 10.6 million, and received $40.9 billion compared to the $44.9 billion approved for the construction sector.


A key aspect to the PPP involves the lenders which consist of banks of various sizes. In order to receive funds, businesses must apply through an appropriate bank. Another possibility for as to why the construction sector received the highest amount of loans may be due to their experience with securing loans from banks. Though, the most likely reason is because many subsectors of construction are considered essential businesses during this pandemic. For example, the hospitals (62211) have resorted to constructing field tents equipped with medical staff and equipment to absorb the influx of coronavirus patients. In order to build these structures quickly, hospitals relied on contractors in the Municipal Building Construction industry (23622b).

The PPP was designed to help all businesses stay afloat during the widespread lock downs around the country, though some small businesses may not benefit as much as others due to its rules. For example, industries in the Accommodation and Food Services sector (72), due to their high operating costs, may not be as eager to secure loans. If a restaurant received a PPP loan, they would have to rehire their staff with no guarantee that conditions will improve in 2 months when the PPP expires, forcing them to shut back down again. With more stimulus funds on the way, lawmakers are looking to revise the PPP’s regulations to benefit a wider range of small businesses.


For more information on the PPP, please see our recent article Industry Implications of Small Business Relief Funds.