By Shereen Siewert
About 41 percent of small businesses in Wisconsin received loans funded by the federal government’s $349 billion Paycheck Protection Program so far, as banks work to process applications for a new round of funding that opened this week.
The program, run by the Small Business Administration, is one of the federal government’s signature efforts to bolster the nation’s employment during the COVID-19 pandemic. A majority of Americans work for companies with fewer than 500 employees.
Data on the 1.6 million loans for small businesses included in the program earlier this month show the average PPE amount per employee in Wisconsin was about $6,500. In all, Wisconsin small businesses received more than $8.3 billion in funding, allowing more than 43,000 of the state’s 106,260 businesses to pay employees during the COVID-19 shutdown.
Small businesses must apply for the money through banks, but the SBA guarantees those loans and must approve each application.
The program relaunched on Monday after running out of money earlier this month. Twice as many people attempted to access the program Monday as during any period in the initial phase of funding, SBA Administrator Jovita Carranza said on Twitter. “The @SBAgov is actively working to ensure system security and integrity while loan processing continues,” she said.
Hundreds of thousands of small businesses were left out of the first round of $349 billion, which ran out in 13 days earlier this month. Some analysts said the new round of funding may go even more quickly.
The SBA has faced intense criticism since the program began amid reports that larger companies and organizations received millions in funding while small businesses were excluded. Many companies, not just those traditionally considered to be small businesses, initially qualified for the benefits because of the way the program’s rules were initially written. After the first round of funding ran out, federal officials acted quickly to tighten the rules and make it much more difficult for publicly traded companies or those with outside money to participate.
Small, local banks were more likely to fund local businesses that applied for funding. But critics say larger banks, such as JPMorgan Chase and Bank of America, doled out millions to larger, publicly traded companies.
The Los Angeles Lakers on Monday announced they would return about $4.6 million in funding they received. Others, despite increasing pressure from the White House, are resisting calls to return the money. Lindblad Expeditions Holdings, which operates high-end cruises, said it met the criteria for applicants and plans to keep its $6.6 million loan.
A group of hotel companies chaired by Monty Bennett, a Dallas executive, also plans to keep the funds, according to public statements.
The new loans are being doled out on a first-come, first-served basis, adding to the urgency for small businesses worried the funding will run out before their loans can be processes.
SBA officials say more than 1.66 million small businesses were assisted in the program’s first round of funding, supporting more than 30 million jobs.
In the first round of funding, just four states saw at least half of their small businesses get loans through the program. A Reveal report found that 58 percent of North Dakota’s small businesses got loans, the highest percentage in the nation. A majority of small businesses in Nebraska and South Dakota, neither of which have shelter-in-place orders, also received help, as did 50 percent in Oklahoma. It was a different story, however, in states with high death tolls and some of the earliest stay-at-home orders prompted by COVID-19. In New York and New Jersey, just 18 percent of businesses got help, the report found. In California that number was 15 percent.