Hardest-Hit States, Once Shortchanged on Small-Business Aid, Are Catching Up

Updated:

One of the surprising features of the U.S. government’s early small-business rescue was that it showered money on states least hurt by the coronavirus pandemic and overlooked some areas hit the hardest. Now, that gap is closing.

Loan Amount as a Percentage of Eligible Payroll

SBA approvals
  • 40% or less
  • 40–50%
  • 50–60%
  • 60–70%
  • 70–80%
  • 80–90%
  • 90% or more
DC VI A S MP GU
DC VI A S MP GU
VI GU MP A S C T DE DC RI

RI

CT

DE

DC

Note: Eligible payroll is based on calculations by Evercore of the average monthly 2019 payroll of businesses with fewer than 500 employees in each state, multiplied by 2.5. Businesses can apply for SBA loans worth as much as 2.5 times the past year’s average monthly payroll.
Source: SBA, Evercore ISI, based on Census Bureau data

States that got an undersized share of the first tranche of loans under the Small Business Administration’s Paycheck Protection Program, including New York and New Jersey, are catching up in the second round, SBA data released May 18 show. Lending accelerated in New York, the epicenter of the outbreak in the U.S., where businesses now have loan approvals worth 74% of eligible payroll as of May 16, up from 40% as of April 16. Shares were measured as a percentage of eligible payroll in each state, as estimated by Ernie Tedeschi, an analyst at Evercore ISI.

The Paycheck Protection Program offers forgivable loans, distributed by banks, to help small businesses, in most cases those with fewer than 500 employees, pay for wages and other expenses. The first round of loan approvals took place between April 3 and April 16 and totaled $341 billion. Congress appropriated a second round of $320 billion, starting April 27, and as of May 16, the total of approved loans was $513 billion. That was lower than the total as of May 8, reflecting cancellations of almost $18 billion.

Among the top early beneficiaries of the program were Great Plains states, such as Nebraska and the Dakotas, whose governors never issued stay-at-home orders common in the rest of the country. Lending in those states slowed during the second round, the data show.

Percentage of Small Businesses Receiving Loans

SBA approvals
  • 30% or less
  • 30–40%
  • 40–50%
  • 50–60%
  • 60–70%
  • 70–80%
  • 80% or more