Research

New York Fed Details Where PPP Loans Have Gone

Study Compares Number Of Cases Against Loans

Keith Griffin

May 13, 2020

NY Fed graphic on distribution of PPP loans

The Federal Reserve Bank of New York has completed a study of where the funds from the first-round of the Small Business Administration’s Paycheck Protection Program loans have been distributed. The New York Fed looked at distribution nationally.

Writing at the New York Fed’s “Liberty Street Economics” blog, co-authors Haoyang Liu and Desi Volker said they were seeking to answer the question: Have PPP loans gone to the areas of the country and sectors of the economy hardest hit by COVID-19?

The duo wrote, “Using the number of coronavirus cases as a proxy for the economic impact of COVID-19 in a specific state, we can look at whether the geographical distribution of PPP loans approved per number of small businesses matches that of COVID-19 cases. The number of PPP loans per state translates one-to-one to the number of small businesses receiving loans, since PPP loans are capped at one per business.

“The figure … suggests that some of the hardest hit areas—such as New York, New Jersey, Michigan, and Pennsylvania—are getting fewer loans than some Mountain and Midwest states on a per-small-business basis. In New York, the epicenter of the coronavirus in the United States, less than 20% of small businesses have been approved to receive PPP loans. In contrast, more than 55% of small businesses in Nebraska are expecting PPP funding.”

The co-authors added, “Building on this initial evidence, we further show that there is no statistically significant relationship between the severity of the economic impact of COVID-19—measured both in terms of cases and unemployment claims—and the share of small businesses getting PPP loans, after excluding New York and New Jersey.”

Read more about PPP distribution.

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