Large Banks Support Small Business Across a Range of Industries Through the PPP

21 Jan 2021
Read Time 3 mins

Introduction

The CARES Act Paycheck Protection Program (PPP) has turned out to be an effective means of quickly providing emergency funding to small businesses.  In this post we document that Financial Services Forum members last year made over 500,000 PPP loans to small businesses with ten or fewer employees across a range of industries from health care to manufacturing to construction.  These data document how Forum members have served small businesses throughout the pandemic while also demonstrating an ongoing commitment to support small businesses in the future.    

PPP Loans to “Small” Small Businesses

Under the terms of the PPP program, firms of varying sizes are eligible to receive PPP loans.  Throughout the program, PPP loans have been provided to very small firms – those with only a handful of employees – as well as to larger firms. Firms at the smaller end of the size distribution have received a significant share of PPP loans and this is true of PPP loans made by large banks.  Figure 1 below shows the number of PPP loans made by Forum members in 2020 to firms with ten or fewer employees.    

            Source: SBA Paycheck Protection Program Data https://sba.app.box.com/s/5myd1nxutoq8wxecx2562baruz774si6

As shown in the figure, Forum members extended nearly 160,000 PPP loans to sole proprietorships (firms with a single employee) in 2020.  In addition, Forum members extended over 250,000 PPP loans to firms with between two and five employees and roughly 110,000 PPP loans were extended to small firms with between six and ten employees.  All told, Forum members extended over 500,000 PPP loans to firms with ten or fewer employees.  In total, Forum members made roughly 850,000 PPP loans last year.  Accordingly, the PPP loans extended to firms with ten or fewer employees represented the bulk (61%) of Forum member PPP lending. Finally, it is worth noting that PPP loans to the very smallest firms, sole proprietors, represented the single largest category of PPP loans for Forum members.   

PPP Lending Across a Range of Industries

The economic shock induced by the pandemic was broad and negatively impacted a wide range of industries throughout the economy.  Forum members responded to the breadth of this shock by extending PPP loans to small businesses across a similarly wide range of industries last year.  Table 1 below shows the top ten industries, by PPP loan count, among small firms with ten or fewer employees that received PPP loans from Forum members.

Table 1: Top Industries Receiving PPP Loans Among Small Firms
IndustryNumber of PPP Loans
Professional, Scientific, and Technical Services83,805
Healthcare and Social Assistance55,484
Other Services45,771
Retail Trade41,133
Administrative37,418
Construction34,228
Accommodation and Food Services21,734
Real Estate Rental and Leasing18,648
Manufacturing18,461
Wholesale Trade18,107
Source: SBA Paycheck Protection Program Data https://sba.app.box.com/s/5myd1nxutoq8wxecx2562baruz774si6

As shown in the table, PPP loans to smaller firms were distributed to a wide range of industries including the Healthcare and Professional, Scientific, and Technical Services sectors, which are themselves important for addressing the pandemic.  The broad array of industries reported in Table 1 shows how PPP lending to small firms was widely distributed in a diversified manner, which is itself helpful in supporting the economy during the pandemic.

Conclusion

The PPP program has been an important program to support a range of small businesses during the pandemic.  Forum members have done their part in supporting firms at the smaller end of the firm size distribution by extending 61 percent of their PPP loans to firms with ten or fewer employees in 2020.  Further, Forum members extended PPP loans to a wide range of industries, which is itself helpful in providing broad-based support to the economy.  The data from the PPP program clearly document how large banks have supported small businesses during the pandemic and further demonstrates an ongoing commitment to support small businesses in the future.     

Forum Updates