It only took two weeks for the United States to distribute $342 billion in emergency relief funding as small businesses clamored for loans to keep afloat during the coronavirus pandemic. About 1.6 million loans were approved by nearly 5,000 different lenders as part of the Paycheck Protection Program, included in the federal CARES Act stimulus package. With demand quickly exhausting the first funding round, Congress approved a second $310 billion injection that is now being distributed.
North Carolina received more than $8 billion in SBA loans for 39,520 applications as of April 16, a large number that didn’t come close to satisfying demand. More than 700,000 residents have filed jobless claims since the COVID-19 outbreak, including more than 185,000 unemployment claims between March 15 and April 27.
Compared with many states, North Carolina appears to have lagged in PPP participation, considering its ranking as the ninth-most populous state with 10 million residents. Georgia, with a population of 10.6 million, had $9.5 billion approved for 48,332 applications. Virginia, with a population of 8.5 million, had $8.7 billion approved.
Data from Bloomberg on the first round of loans indicates that many rural states benefited the most on a loans per-capita basis in the first-come-first serve program, intended to assist businesses with fewer than 500 employees.
North Carolina received $763 in loans per capita. Meanwhile, South Dakota, with about 885,000 residents, received a $1.4 billion allocation in loans, or $1,548 per person.
Experts say small businesses in rural areas tend to have close relationships with their lenders, who moved quickly to issue loans. Meanwhile, larger institutions that dominate in urban areas were flooded with applications and struggled to meet demand. States hardest hit by the pandemic or that instituted the earliest lock downs on movement may have had more difficulty getting lending started, according to the New York-based Evercore investment firm.
Charlotte-based Bank of America said it had sent 239,000 applications to the SBA as of yesterday. Wells Fargo, which has a big market share in North Carolina, has been less active in the program as it deals with regulatory restrictions on its growth because of past controversies involving sales practices. Analyst says other large banks had trouble processing the sheer volume of loans.
Restaurants, startups and mom-and-pop shops have also had greater trouble accessing resources than larger, more established companies with expertise to navigate the process. And minority-owned small businesses have expressed particular dismay at their inability to access the PPP.
In the first round of loans, 200 publicly traded companies received more than $750 million in emergency relief. But many are now giving the money back after criticism from politicians and others. Dining chain Shake Shack is returning a $10 million loan, Ruth’s Chris Steak House is giving back $20 million and the Los Angeles Lakers are returning the $4.6 million loan.
A few N.C.-based public companies were approved for PPP loans, including Denver-based air cargo carrier Air T, which received $8.2 million, and High Point-based mattress ticking maker Culp, which got $7.6 million, according to IndyWeek, a Durham-based publication.
Federal regulators want more of the smallest businesses to get loans, so they have placed new restrictions on loans that banks with more than $10 billion in assets can provide for the second round of relief funds.
The agency only accepted loans from banks with $1 billion or less in assets until midnight last night. During that time 5,300 community and small banks approved 960,000 applications totaling $60 billion in loans, according to the New York Times.