HAMPTON ROADS, Va. – With another set of loans from the Paycheck Protection Program possibly coming out, News 3 looks at where your tax money went during the first round.
New data released from the Small Business Administration outlines who got what in Hampton Roads.
The Paycheck Protection Program was rolled out by the U.S. Small Business Administration several months ago.
They say the main purpose of the program was to keep workers at small businesses on the payroll.
But what defines a small business?
“The standard definition of a small business, according to the SBA, is 500 employees or less,” said Steve Bulger, the Regional Administrator for the Small Business Administration.
Jim Carroll is the Vice President of Small Business at the Hampton Roads Chamber and the Director of the Small Businesses Development Center. He said the pandemic has been very difficult on small businesses for a number of reasons, including less cash flow, a disruption to the supply chain, a disruption in customers buying habits and more people shopping online.
“People have just changed the way they do business,” said Carroll.
Old Dominion University professor and economics expert Bob McNab has been analyzing the $2 billion that he says was pumped into our region through the PPP loans.
The loans range from anywhere between a few hundred dollars to $10 million, which several businesses in our region obtained.
McNab said 70% of the total loan value was given to businesses that received $150,000 or more, saving 65,000 jobs, while 30% of the total loan value went to businesses receiving less than $150,000, saving 55,000 jobs. But the SBA says not all jobs were reported in the data and those numbers are likely to go up.
And while a number of loans went to smaller businesses, McNab said the majority of the money given out went to larger- and medium-sized businesses.
“This is something we're seeing across the United States - that there's a disparity in how these loans came about; that large firms got most of the loan value,” said McNab.
The SBA said there was a formula for the loans that was based on the number of employees and the amount they were making.
“I can understand that some people may look at it and say, ‘Oh, how come the small companies didn't get as much?' Well, they didn't have as many employees. The bigger companies have more employees, and the formula was based on how many employees the loan needed to support,” said Bulger.
Bulger said the distribution process went quickly.
“We basically had six days from when the CARES Act was passed in late March to April to when the program opened up. Six days to put together the biggest loan program in the history of small business in our country, so everybody was scrambling,” said Bulger.
Bulger said if lawmakers pass another round of PPP loans, there will be changes to the process. He said there are plans to lower the number of employees that would qualify as a small business instead of 500 employees or less.
He said they will also max out the highest loan amount at a much lower number than $10 million. He believes businesses will also have to show and prove they’ve experienced a loss in revenue. He said if a company is doing well and has bounced back, they should not be eligible for the loan.
McNab agrees with making the rules stricter to help more of the smaller businesses.
“If your intent is to provide a bridge for small businesses to get through the pandemic, then you should structure the law so it favors small businesses,” said McNab.
“When you take a look at the volume of business and the volume of money that got money out very, very quickly, was it the most efficient and effective way? No, but the SBA made changes as problems came up, and so they did the best they possibly could under a very, very difficult situation,” said Carroll.