Loans |
| 10 Best States for COVID-19 Paycheck Protection Program Assistance Posted: 02 Feb 2021 01:21 PM PST
View as image With the economy in danger of collapsing due to the novel coronavirus, Congress stepped in to help small businesses. Enter the CARES Act, which created the Paycheck Protection Program (PPP). The Paycheck Protection Program allocated federal government dollars to small businesses across America. It was a way of keeping small businesses alive while supporting their employees. But even though small businesses in all states were allowed to apply, some states received better award amounts than others.
A gauge of this is to look at each state’s number of jobs covered under the PPP, which is represented in the graph above. It’s interactive. Just hover your cursor (desktop) or press your finger (mobile) to see the results in a particular state. The number of PPP-covered jobs versus all jobs ranges from 11.5 percent to 47.3 percent. The median for all states is 28.4 percent. After our ranking, we’ll cover some of the major topics surrounding the Paycheck Protection Program, including:
If you’re interested in searching for loans right away, check out our best loans by state page to learn more about loan options in your state or a state you want to move to. Now, back to the Paycheck Protection Program. Check out our ranking by scrolling down. 10 Best States for Coronavirus PPP AssistanceOur 10 best states for coronavirus PPP assistance are scattered across the country. Some are on the East Coast, others on the West, and we even have one in the Pacific Ocean. On top of that, their populations and landmasses are all very different. So what do they have in common? To create our ranking, we looked at a single statistic: how much the average PPP loan in a state made up of the state’s average salary. The average PPP loan percentage for all states makes up 28.9 percent of the average salary. The average salary for all states was adjusted for the cost of living. Before we get into the ranking, we have four graphs that show four factors for the 10 best states:
First, here’s a look at the number of jobs per state covered by the Paycheck Protection Program. Within our 10 best states, the number of jobs covered ranges from 100,000 to 3.2 million.
The state with the largest number of jobs is New York at 3.2 million. Two states share the spot for the smallest number of jobs covered: Delaware and Vermont at 100,000. The next graph shows each 10 best state’s average salaries adjusted for the cost of living. As we’ll see in the sections below, the cost of living can reduce or raise a state’s average salary significantly.
The state with the highest average salary is Washington at $39,600. The state with the lowest average salary is Hawaii at $31,500. The following graph contains a statistic that is integral for our overall ranking: the loan amount per job. Generally, if a state has a larger loan amount per job, its employees have received more assistance compared to states with a smaller loan amount. As you’ll see in the ranking, though, that is not always the case.
There are two aberrations to the assumption that a larger loan amount per job equals better assistance. The first is with Hawaii, which is ranked No. 3 in the overall ranking. It has a smaller loan amount per job than the No. 4 and No. 5 states. The second is New Jersey, which is ranked No. 10. It has a larger loan amount per job than the No. 9 and the No. 8 states.
The final graph in this section looks at the top five industries for those 10 best states. To create this ranking, we looked at the three largest industries in all 10 states for 2018. Then, we calculated the total revenue from those industries and ordered the list with the highest-revenue industry on top. In 2018, all industries generated $85 billion or more, while the largest industry made a little over $570 billion.
The top three industries are all spaced by at least $100 billion. The largest industry is real estate, which generated $572 billion in 2018. The next largest industry is professional and business services at $470 billion. The third-largest industry is finance and insurance at $344 billion. Small businesses were projected to lose up to $431 billion a month for every month the shelter-in-place orders were in effect. Those graphs give a large-scale view of the best 10 states. The ranking is in descending order—the No. 10 ranked state at the top going all the way down to the No. 1 state. We’ll use further statistics to provide an analysis of how well the PPP is covering workers in those states. Of course, there are more types of loans that business owners can apply for to help them get through the devastating effects of the coronavirus pandemic. Check out our business loans page for more information. #10 – New JerseyNew Jersey, the Garden State, is our No. 10 state on this list. The following table shows five statistics: the number of jobs PPP covers in New Jersey, the total PPP loan amount to the state, the loan amount by the job, the average salary in Jersey adjusted by the cost of living, and how much the average PPP loan makes up of the average salary. [table “14” not found /]The PPP covers 1.5 million jobs in New Jersey, which is the second-highest of all states on this list. It also received the second-highest PPP award at $17.2 billion. You might think that this means that every covered job in New Jersey has a high PPP loan amount. This is not the case. New Jersey has the third-lowest loan amount per job of the 10 best states. There are further problems, as the average salary in New Jersey is relatively high compared to other states in this ranking. This means that the average PPP loan in New Jersey makes up 32.5 percent of the state’s average salary. This puts it at No. 10 on this list. Other than a PPP loan, residents of New Jersey have many options for loans depending on where they live. A loan in New Jersey may save a business in the long run, even if it doesn’t come from the PPP. #9 – MaineMaine, the Pine Tree State, comes in at No. 9 on this list. The following table shows those same five statistics we covered in New Jersey. As you’ll see, the amount the PPP awarded to Maine is much smaller than New Jersey’s. But the number of jobs being covered under the PPP is much smaller as well. [table “23” not found /]Because Maine has just 200,000 jobs covered under the PPP, the overall loan amount given to small businesses in the Pine Tree State is much smaller than other states. The comparison between the two shows Maine has the second-lowest loan amount per job. But it also has one of the lowest average salaries in the 10 best states. This means that its average loan amount in Maine goes further for its residents than those in New Jersey.
Maine ranks high out of all 50 states for PPP assistance, which is certainly good news. Finding a loan outside of the Paycheck Protection Program has never been simpler as well. There are hundreds of areas to find a loan in Maine, from smaller towns to cities. #8 – New MexicoNew Mexico, The Land of Enchantment, comes in at No. 8 on this list. The statistics below for our five categories show almost identical numbers as Maine. But there is one large exception that separates New Mexico from the previous two states. This shows that workers in New Mexico are receiving better assistance. [table “24” not found /]The first three statistics are almost the exact same compared to Maine. Only the loan amount per job is different — New Mexico’s average loan amount is $6 lower. The main difference is the average salary adjusted for cost of living. The cost of living in New Mexico is $760 lower than the cost of living in Maine. This stretches the loan amount a little bit more, accounting for 33.7 percent of the average salary compared to 33 percent in Maine. If you’re a small business owner and need more than the PPP loan to keep your business alive, you can find options for loans in New Mexico, depending on where you live. #7 – VermontVermont, the Green Mountain State, comes in at No. 7 on this list. The table below shows our five statistics: the number of jobs in Vermont covered by the PPP, the total loan amount awarded to Vermont, the loan amount per job, the salary adjusted for the cost of living, and the percentage the loan amount makes up of the state’s average salary. [table “25” not found /]Vermont is just one of two states with 100,000 jobs covered by the Paycheck Protection Program. This is the lowest number of jobs covered by a single state. In addition, the PPP loan amount awarded to Vermont is the lowest out of all 10 best states.
When factoring in Vermont’s average salary by the cost of living, the percentage of that salary made up by a PPP loan is higher than those previous three states as well: 33.9 percent, 1.4 percent higher than the lowest state on this list. #6 – New YorkNew York, the Empire State, comes in at No. 6 on this list. The following table shows New York’s statistics for jobs covered by the PPP, the total loan amount given to New York, the loan amount per job, the salary by the cost of living, and the percentage of the salary covered by a PPP loan. [table “26” not found /]New York has the largest values in two of our five categories. It has the largest number of jobs covered under the Paycheck Protection Program and the highest total award amount out of our 10 best states. As we’ve seen, though, it’s the ratio of the loan amount per job that matters the most. In this case, New York’s loan amount per job is ranked just sixth overall. New York’s average Paycheck Protection Program loan makes up 34.2 percent of the state’s average salary when that salary is adjusted for the cost of living. This is in the middle of the pack. What’s interesting to note is that New York had one of the highest average salaries of all states and was just one of seven states that had an average salary of over $40,000. But when the cost of living was factored in, that average salary dropped a little over $5,000. #5 – VirginiaVirginia, with its nickname of Old Dominion, comes in at No. 5 on this list. The table below shows its values for our five statistics that we’ve covered for each state so far. Those are the number of jobs covered by the Paycheck Protection Program, the total loan amount awarded to Virginia, the average loan amount per job, Virginia’s salary by the cost of living, and the percentage of the average salary equivalent to the average PPP loan amount. [table “27” not found /]Like with other states, we see a correlation between the absolute values of the number of jobs PPP covers and the total loan amount. Virginia has much fewer jobs covered under PPP than New York and has a much smaller total loan amount as well.
This is because although Virginia received less money, fewer jobs in the state were covered. Combine that with Virginia’s average salary adjusted by cost of living, and Virginia’s percentage of salary made up by PPP loan amount is 35.2 percent. While that’s a large number and better than 45 other states, business owners still might feel the strain in their personal pocketbooks even though their business continues to hang on. For this, a business owner can seek out a personal loan through numerous loan companies in Virginia to give them some peace of mind that their personal bills will be covered. #4 – New HampshireNew Hampshire, the Granite State, comes in at No. 4 on this list. The statistics below show New Hampshire’s values for the number of jobs covered by the PPP, the total loan award amount, the loan amount per job, the average salary by cost of living, and the percentage of salary that makes up the average PPP loan. [table “28” not found /]New Hampshire is quite the opposite of the last two states we’ve covered. It has just 200,000 jobs covered under PPP, which is tied for the second-lowest total of our 10 best states. Its $2.6 billion award from the PPP is lumped in with numerous other states who received total loan awards between $1 billion and $3 billion. New Hampshire’s average loan amount is $12,500, the third-highest for all states. New Hampshire’s average salary adjusted by the cost of living is $33,700. This is what drops it to the No. 4 spot. The combination of these statistics means that the average PPP loan amount makes up 37.8 percent of the average salary. Sometimes, however, PPP loans are not enough and you need an additional loan to keep your business afloat or pay your personal bills. There are a plentiful number of loan companies in New Hampshire where you can get loans, including personal and business loans. #3 – HawaiiHawaii, the Aloha State, comes in at No. 3 on this list. Hawaii has nearly identical statistics for the number of jobs covered and the overall award amount. In addition to those two statistics, the table below shows the average loan amount per job in Hawaii, the average salary by the cost of living, and the percentage that the average PPP loan makes up of the state’s average salary. [table “29” not found /]Hawaii actually has a lower loan amount per job than New Hampshire by around $250. But because the average salary in Hawaii is $2,200 less than in New Hampshire, the percentage of salary made up by the average PPP loan amount is higher. In Hawaii, if you missed out on the PPP funding round, you can secure loans in dozens of areas including Honolulu. Getting a loan in Hawaii can make the difference between success and failure and, most importantly, keep a person from going bankrupt. #2 – DelawareDelaware, the First State, comes in at No. 2 on this list. Out of our 10 best states, Delaware is the state with the first big jump in overall statistics compared to the previous eight states. The table shows those same five statistics: the number of jobs in Delaware covered under the PPP, total award amount, the average loan amount per job, average salary by the cost of living, and percentage of salary equivalent to the average PPP loan amount. [table “30” not found /]Delaware has the second-lowest award amount out of all 10 states and a small number of jobs covered under the PPP. Because of the ratio of those two numbers, Delaware easily has the second-highest loan amount per job. The fact that it has the second-highest salary by the cost of living brings it down a little. That makes the percentage of its average salary equivalent to the average PPP loan value 40.8 percent or just 1.2 percent above Hawaii. While the PPP loans are necessary for some small businesses to survive, they face additional challenges as shelter-in-place orders end and economies continue to open up.
Fortunately, there is an easy way for employees to check if they have the coronavirus before returning to work. That way is a coronavirus test. Some health insurance companies cover coronavirus testing. Call your insurance company to find out more. #1 – WashingtonWashington, the Evergreen State, comes in at No. 1 on this list. How does it fare compared to other states? The following table shows the number of jobs covered under the PPP in the state, the overall loan amount, the loan amount per job, the salary adjusted by cost of living, and the percentage of the average loan amount per job makes up of the average salary. You’ll see big jumps in the statistics that matter the most: loan amount per job and percentage the average loan amount makes up of average salary. In addition, the amount of money it received compared to the number of jobs is much higher than for other states. [table “31” not found /]As of the end of June 2020, Washington has received $12.3 billion in loans for its small businesses. The number of jobs covered in Washington is around 500,000 jobs. In comparison, Washington exceeds all other states for average loan amount per job. To get a closer look, we’ll analyze Washington’s statistics compared to the three states that have more jobs covered under the PPP: Virginia, New York, and New Jersey. The following table shows the number of jobs and total loan award amount covered through the PPP for Washington, Virginia, New York, and New Jersey. In the final column at the far right, those award amounts are what Washington’s award would be if it had the number of workers covered under the PPP in Virginia, New York, and New Jersey. [table “5” not found /]Washington’s award amount if it had the number of jobs covered compared to those three states beats all of them by at least $12 billion. In addition, Washington’s $24,604 loan amount per job is $9,700 higher than Delaware’s. Its PPP loan percentage out of the average salary is 62.1 percent, 21 percent higher than Delaware, the second-place finisher. However, that doesn’t mean all small business owners fared well in securing a PPP loan. Later, officials and organizations analyzing the PPP program noted that some business owners were left out either due to pre-existing relationships other business owners had with banks or other issues. For these business owners, finding a new loan might be the only way to prevent their business from going under. Fortunately, it is possible to secure a loan in Washington separate from the PPP program. This can keep businesses afloat while protecting an owner from bankruptcy. Some businesses, unfortunately, suffered damage during riots back in early 2020 and are fighting with business insurance companies for reimbursements due to damages. Commercial insurance can cover riots and other more niche issues, but you must look at your business plan to be sure. 50 State Comparison: Coronavirus Paycheck Protection ProgramSo we’ve covered the 10 best states for coronavirus PPP assistance. In this section, we’re going to look a little broader, moving from 10 states to all 50 states in America. Because the statistics are so detailed, we’ve compiled four interactive charts that allow you to search for your own state easily and quickly. These charts cover three statistics we’ve seen before:
The first chart shows the PPP approval amount per job by state. Unlike the previous chart, these statistics are shown in bar charts, with the states organized according to region. Click on a specific tab at the top of the graph to see states in that region. View as image There are just 18 states above the average loan per job amount for all states. This, again, points to the difference between the loans each state is receiving. There is a cluster of states that are receiving PPP loan awards per job far above the other states. With this graph, the region with the most states above the average PPP loan per job is in the Northeast. The second region is the West, while the South and the Midwest make up third and fourth spots, respectively. The average PPP award for all states is $10.3 billion, while the median PPP award value is $6.4 billion. The next chart shows the average salary in all 50 states adjusted for cost of living. This one is a countrywide map. If you’re on a desktop computer, hover your cursor over a particular state to see the average salary in that state. Or if you’re on mobile, press your finger down on a state to see its statistics. View as image As you can see, there are only two states where the average salary by the cost of living is over $40,000. The average salary by the cost of living for all states is just $34,500. That number jumps by $900 when the cost of living isn’t factored in. The average salary for all states then becomes $35,400. The median salary jumps as well from $33,600 to $35,100. The states that had the biggest rise when factoring in the cost of living were predominantly Southern or Midwestern states. The biggest rise was in Mississippi at $4,445. The state with the biggest drop was New York at -$5,339. The next chart shows the statistic that determined our ranking: the percentage of the loan amount that makes up the average salary adjusted by the cost of living. View as image Between the 50 states, there was a wide disparity between the states with the highest percentages and those with the lowest. We’ve already seen that Washington state had the highest percentage at 62.1 percent. The lowest was 43 percent less than Washington — Utah at 19.1 percent. The median for all states was 27.8 percent. Twenty-seven states are between 24 percent and 29 percent. While the graph may seem even, the majority of the states at the lower end of the spectrum are rural states, whether in the Midwest or the South. States with more urban populations are higher in the list. The Coronavirus Pandemic’s Economic ImpactWhen the novel coronavirus reached the United States in February 2020, Americans watched as it spread from coast to coast, shocking the nation as it had for other countries in the world. At first, community leaders tried to maintain a sense of calm even as the pandemic spread. Some mayors and governors had tried to keep cities and states open for a time to keep the economy going, in spite of the rising number of cases, hospitalizations, and deaths. Soon, however, states were shut down, people kept in their houses, with economies grinding to a halt. Small businesses were caught in the mix: They needed to pay their employees and rent for their buildings. But without their customers, they were generating little to no revenue. Soon, statistics came in that showed the devastation that the coronavirus had on the economy. What happened, now that the economic damage has become clearer?
Soon, the U.S. Congress passed the CARES Act, which provided Americans with a great deal of financial relief. Things looked less bleak, and soon governors were reopening their states to revive dormant or struggling economies. But in that time between the shutting down of cities and states to the reopening, some industries have been hit harder than others and face a long road to recovery, if they will make it there at all. The industries most affected in most cases have been ones relying on in-person customers. These include restaurants, retail stores, and the travel industry.
Workers and small businesses face a unique struggle, which the federal government has noticed and attempted to provide aid. Time will tell what the American economy will look like after all of this. It is unlikely, if not impossible, for things to go back to the way they were before. Next Steps for COVID-19 Economic RecoveryCongress is in the process of drafting a bill to provide more relief to businesses and workers. Another stimulus check is possible, and more help for small businesses and corporations seems on the way. Some industries have come out looking good in this pandemic. Internet video conferencing companies like Zoom have seen their revenue shoot through the roof. Online content distributors like Netflix, Hulu, and Amazon Prime have seen their new customer signups grow dramatically with people forced to remain home. While many small businesses will be looking to the PPP loans for assistance, it is possible that any business-to-consumer companies that rely on in-person sales will continue to struggle. Our buying preferences have shifted from in-person shopping to online purchasing of products, which could affect retail stores even as economies reopen. Many people have even shifted over to grocery delivery rather than enter a grocery store. Shopping malls may be barren or forced to close in the coming months or years. Time will tell how this all plays out and how many small businesses survive this time period, what industries will take the longest to recover, and which workers have to switch over to another job or occupation. Some industries have taken advantage of PPP loans more than others, using Paycheck Protection Program rules and Paycheck Protection Program updates to secure loans while also applying for loan forgiveness. It’s important to note that PPP loans are not just for small business owners but also for self-employed workers who can also fill out a PPP loan application.
A PPP loan for self-employed workers follows the same rules as those for small business owners, including the ability to use part of the money for monthly rent, mortgage payments, or utility bills. It remains to be seen how many self-employed workers a person will find on a list of Paycheck Protection Program recipients, including a list of PPP loan recipients by state. But it is a step in the right direction and can save self-employed workers from financial catastrophe. There are some people — perhaps bold — that are trying to start businesses during this pandemic as well. While it may be a challenge for these individuals to secure a business loan if unemployed, it’s not impossible. Many of today’s great companies were founded during the last economic crisis called the “Great Recession.” Perhaps in a few years, we’ll see new, major companies started during this period of acute economic distress. PPP Discussion: Financial Relief, Hidden Dangers, & FraudWe’ve covered our 10 best states for the Paycheck Protection Program and briefly looked at how the PPP has affected all states. Now, we’re going to spotlight four expert opinions about the PPP and how it affects small businesses. Of these experts, two are small business owners, one is a financial consultant, and the other a lawyer. Together, they cover everything from the difficulties facing small businesses and the tricky nature of selecting a loan to the possible fraud investigations.
First, we interviewed a former employee of the Small Business Administration who has been consulting a number of organizations and companies on Paycheck Protection Program loans. Check out his expert advice below. What are the benefits or risks of accepting a Paycheck Protection Program loan? "The great benefit of the PPP loan is that it's a very low-interest loan and if used correctly, a loan that doesn't have to be repaid. It's meant to subsidize things like payroll, certain benefits, business mortgage interest, business rent, and business utilities for a period of time. The greatest risk is if you're 100 percent dependent on the loan forgiveness and don't meet that, you'll have to repay part of the loan at a very low 1 percent interest rate within two years." Are there any hidden dangers of accepting a loan? "Certain aspects of the loan are tricky. Only certain types of benefits are covered and it depends on how your company was incorporated. This is especially true for employer contributions to health care and retirement plans. There are also some stipulations around paid leave and sick leave. The biggest danger is if you don't rehire your employees or reduce their salary to lower than 25 percent of what they made before the pandemic hit, as that triggers a formula that may reduce the amount forgiven." Why would you accept or not accept a PPP loan for your business? "If you feel confident that you can utilize the loan primarily for payroll expenses (and other allowable expenses) in the coverage period, it's a good idea to get the loan, as that money will be forgiven and give you some cash to bridge expenses.
It may be considered fraud if you apply for the PPP loan knowing that you're going to use the funds for non-forgivable expenses, so stay clear of the loan if you have other plans for it besides the forgivable expenses." Do you think the Paycheck Protection Program is doing enough for small businesses? "I think more needs to be done for small businesses. These loans were meant to hold over small businesses for essentially two months but the pandemic is clearly lasting longer, and small businesses face a lot of uncertainty, including potential shutdowns. We need to help our small businesses survive these times in order to get our jobs numbers back up after the pandemic is over. Small businesses employ as much as 50 percent of the country's workforce. I fear many small businesses, without additional help, will go under and our economic recovery will be much slower." Do you think businesses are getting PPP loans that shouldn’t be? "There are probably a few bad actors that are getting PPP loans that don't need them. The hope is that these are the exception and not the rule."
"I own a company located in the San Francisco Bay Area that sells office headsets. I applied to the SBA Paycheck Protection Program (PPP) for my business in July of 2020 when it was first announced. The loan process was simple enough; I just needed to send in some paperwork. It was quickly approved by my bank we have our business checking account with. In order to qualify for PPP, I had to submit the following:
Obviously, you have to show that you're a real business and have evidence of employees on your payroll. When my bank received the applications, the funds were quickly processed and received with a week of approval. Given that COVID-19 is not going away any time soon, I do expect another round of assistance programs will get approved by Congress.
The first PPP loan was designed to help us for only three months. We're staying afloat by the skin of our teeth. Going forward, without further funding or another round of PPP assistance, we will have to lay off many of our existing staff and move to a smaller office and warehouse. We might even have to close our business if we cannot generate enough income to stay in business for the next few months. Most of what the PPP provided for us is already used up." Commonly Asked Questions for Businesses Filing for PPPWhat steps have you had to take to pay your employees during the coronavirus pandemic? "Personally, I had to apply for PPP and secure other funding." Have you had to reduce salaries, restrict hours, or employ other mechanisms to keep your business afloat? "We have reduced employee hours and had to reduce staff, unfortunately." How has the Paycheck Protection Program helped your company? "Our PPP funds are running out. It will only help us for about two months." What was the process of applying for the Paycheck Protection Program? Were there any qualifications you had to meet or expectations that came with the loan? "I went through my bank where I have my business account. To qualify, I had to submit last quarter's payroll tax return (Form 941), 2019 Income Tax, 2019 Profit and Loss Statement, and evidence of employee health insurance coverage." Do you anticipate another round of funding for the Paycheck Protection Program with the second stimulus package being debated in Congress right now? "I expect another round would get approved by Congress very shortly. Otherwise, many businesses will go under since COVID-19 is not going away anytime soon." If there is, will you seek another loan? "Yes, in order to stay afloat." How will you handle payroll moving forward? "One payroll at a time, until funds run out." Will you be forced to lower payroll for a longer period of time or do other things to reduce the burden of payroll in your company? "If we don't receive any more funding or help from the government, we will have to further reduce our number of employees and maybe even shut down our business entirely."
“When PPP was introduced, I was actually very hesitant at first on the Payroll Protection Program. I run a financial consultant business and when my very first client was inquiring about the loan, I came up with about five scenarios on why it wouldn't work or how it would affect them. I called them numerous times going back between taking and not taking it. Since then, more and more information has come out and SBA updated their rules and regulations.
Of course, I think there is an exception to every rule and if you have not been running your business for a while even prior to COVID-19 closures or you plan to use the funds for personal reasons then I don't advise you to take it. The funds are strictly meant to be used toward payroll, rent, and utilities, but the new law will allow borrowers to expand past just utilities and include software, legal fees, and professional fees as well. Also, if you run a business that has offshore employees, then your business does not qualify either. For businesses that were closed for a certain period of time even though they did have some savings, you still qualify and should apply. The funds are meant to help you not only during COVID-19 closure but also for when you reopen. Your business will not be the same for a while and there is always the possibility of closing again in the fall. So if your business qualifies and you plan to use the funds for valid expenses, I highly urge you to take it. Since PPP is meant for businesses that have employees, many landlords do not qualify since they do not have any staff. Commercial tenants have been getting creative and working out deals with their landlords. These tenants are trying to use their approved PPP funds into getting a reduced rent for the three to four months they were closed. They are also trying to use the funds to pay ahead for future months. This way the business owner can use the credit and the landlord can also get paid and not lose tenants.”
“Paycheck Protection Program & Loan Frauds Emerging from the COVID-19 Pandemic” The Paycheck Protection Program (PPP) was created to provide much-needed financial relief to small and medium-sized businesses that are facing financial strain due to the COVID-19 crisis. Any time a federal program offers financial relief to businesses or consumers, there are going to be questions raised about fraud. But, with the nature of the PPP and the extraordinary rate at which its multi-hundred-billion-dollar allocation was depleted, many companies that received PPP loans can expect to face heavy scrutiny from federal authorities. What constitutes Paycheck Protection Program loan fraud? As with all types of federal programs, there are various acts and omissions that have the potential to lead to allegations of federal fraud in relation to the PPP. This includes not only intentional misrepresentations that can lead to criminal fraud charges. Fraud allegations also include inadvertent mistakes that still resulted in the improper receipt of federal funds. Here are several loan fraud trends, spurring from the Paycheck Protection Program:
What should you do if you or your company is targeted for Paycheck Protection Program loan fraud? If you or your business is targeted in a PPP loan fraud audit or investigation, the single most important thing you can do is to engage in an experienced federal defense counsel right away. This is a serious matter that requires your immediate attention.”
Frequently Asked Questions: Specifics on Paycheck Protection Program LoansWe’ve covered the Paycheck Protection Program, the 10 best states for PPP assistance, and how the PPP has impacted all 50 states. Now, we’ll jump into a few of your frequently asked questions about the Paycheck Protection Program that you may have had as a small business owner, independent contractor, or self-employed worker. #1 – How do you qualify for the Paycheck Protection Program?You must retain the average monthly number of full-time employees or more than the average monthly number of full-time equivalent employees than you have for the past year. In addition, you must use 75 percent of your PPP loan on payroll. If you receive a loan but do not meet these requirements, the percentage of your loan that can be forgiven might change. #2 – What can Paycheck Protection funds be used for?While a small business owner must use 75 percent of the loan on payroll, they may also use the loan to help pay for interest on mortgages, rent payments, or utility payments. It is important to note that a “small business owner” may also be an independent contractor or self-employed individual. #3 – What banks have the Paycheck Protection Program?There are at least 30 banks that will accept applications for a PPP loan. These include heavyweights like Bank of America, Chase, and Capital One, and smaller banks like Regions and Seattle Bank. According to the U.S. Treasury as well, banks are not the only qualified lenders. Others include credit unions, fintech, farm credit lenders, and microlenders. #4 – Where can I get a check protection loan?As noted above, there are numerous places a small business owner, independent contractor, or self-employed individual can apply for a PPP loan or check protection loan. These include standard banks, credit unions, farm credit lenders, microlenders, and business and industrial development companies. The largest lender at the end of June was JP Morgan Chase Bank. #5 – How can I get my PPP forgiven?There are a couple of ways. The first is to comply with the requirements of the loan, such as using 75 percent of the loan for payroll and making sure to keep the number of full-time employees or more than the average number of full-time equivalent employees on your payroll. If you’ve already laid off your employees, you can use the PPP loan to rehire them, which can also count toward having your loan forgiven. #6 – How do I know if my PPP loan is approved?The way you can find out if your PPP loan is approved depends on the bank, other types of lender, or organization you submitted your application through. Each company or organization will have its own process. Often, you can check on the status of your application online. In other cases, you can call the bank or organization or talk to someone in person, if the bank is open in your area. #7 – Are PPP loans still available?As of the end of June, PPP loans were still available, but the amounts have been reduced since the start of the program. Small businesses have been lobbying Congress for more small business assistance as it puts together its second stimulus package. Part of the reason is that the PPP was intended to cover two months. However, state and city economies have struggled to reopen with the surge in coronavirus cases. For this reason, small businesses are still in danger of going bankrupt, and many more might do so if they don’t receive any further government aid. #8 – Can employees get PPP and unemployment?The quick answer is no. If an employee or someone who is self-employed decides to take out a loan through PPP, they cannot receive unemployment benefits. There is a difference in how much you can receive through each and which one might be the better fit for you. While you might be able to receive more through a PPP loan (which allows for an award amount 2.5 times your average monthly earnings), unemployment might get you more in the long term with the $600 boost that came as part of the CARES Act. There is another key difference: if you’re on PPP, you can continue to receive health insurance through your employer. If you’re on unemployment benefits, you can’t receive that insurance. Which you go with depends on your personal situation. #9 – What are the PPP rehire requirements?The general rule in PPP is that a small business owner has to use 75 percent of the loan on the payroll. This gets a little complicated if a small business owner needs to lay off employees or has done so before receiving the PPP loan. Even still, the rules encourage a small business owner to rehire their employees, even if it’s toward the end of the loan period. The rules do this by mandating that a small business owner retains the same number of employees during one of the reference periods. A small business owner can meet these requirements by rehiring employees or even hiring new ones. The goal behind the loan, first and foremost, is to pay employees and that’s a key requirement in getting the full amount of the loan forgiven. #10 – Can 100 percent of a PPP loan be used for payroll?Although a business owner must use at least 75 percent of their Paycheck Protection Program loan on payroll, there is no upper limit to this, meaning that a business owner can use 100 percent of their PPP loan on payroll and still have the loan forgiven. #11 – What documents are needed for PPP loan forgiveness?While there are different types of Paycheck Protection Program loan forgiveness applications, many of the required documents overlap between the two. The documents typically needed for PPP loan forgiveness include bank statements that show how you used the PPP loan, the number of employees you had at the time you applied for the PPP loan and their salaries, identifying information of your business (business TIN, for instance), and any documentation of mortgage payments or any other use of the PPP loan other than for payroll. Methodology: Federal Statistics to Analyze CARES Act ImpactFor this study, we analyzed data from four sources:
The specific data we collected was the number of jobs covered in each state under the Paycheck Protection Act, the total size of the PPP award for that state, the average salary for that state, and the average salary for that state adjusted for the cost of living.
The higher the percentage, the more of their lost income was covered. The 10 best states were a mix of small and large states, urban versus more rural. In general, however, rural states were toward the bottom of the list, while more urban states were at the top. This study, in some ways, was an analysis of the Paycheck Protection Program part of the CARES Act. We saw which states were receiving more or less money on average compared to the salary of the average worker in those states. The post 10 Best States for COVID-19 Paycheck Protection Program Assistance first appeared on Loans.  |
| Paycheck Protection Program – Top 10 Industries Benefited [+ Loan Amounts] Posted: 02 Feb 2021 12:42 PM PST
View as image In an unexpected twist to 2020, the first pandemic in 100 years broke out, shuttering businesses, putting employees out of work, and tanking entire industries while forcing others to adapt on the fly, like the travel insurance industry. Companies in the industries that managed to stay afloat were presented an opportunity: take a loan covered by the federal government to pay their employees and stay current on critical bills or risk bankruptcy. The life-saving loans came from the Paycheck Protection Program, formed through the CARES Act. In this study, we looked at the Paycheck Protection Program benefit by industry. In the graph at the top of the page, you can see each industry’s PPP award amount out of a percentage of the entire loan amount for all industries. The industry that received the most absolute dollar assistance was the health care and social assistance industry at 12.9 percent of the entire Paycheck Protection Program awarded amount to all industries. But, the absolute values aren’t the standard in this ranking. In our rankings, some industries fared better than others even if they didn’t have a huge overall loan amount. Which ones were they? In this article, we’ve got the top 10 industries that benefited the most from the Paycheck Protection Program.
After we cover the top 10 industries, we’ll also add in those topics and burning questions about the PPP.
If you’re a business owner in one of these industries but missed out on the PPP funding rounds or need more money to keep your business afloat or pay your employees, you might consider a business or personal loan. Fortunately, we’ve got you covered. Check out our loans near me page to browse through companies that offer you loans in your area. Each state has dozens if not hundreds of companies listed that offer loans, with a further breakdown by city. Now, back to the Paycheck Protection Program. Scroll down to get started. Top Industries Ranked by Paycheck Protection Program BenefitsYou might be thinking: How can you measure which industry benefited the most from the Paycheck Protection Program? We get it. It’s difficult to assess how well an industry did compared to others through basic statistics like the number of loans issued or the total amount of money issued from the Paycheck Protection Program. That's why we studied reports from not just the Small Business Administration and U.S. Department of Treasury, but also what we could find from the Bureau of Labor Statistics. Each industry is graded on one factor: How many employees at a median industry salary can the average industry loan cover? As you’ll see, all average loans for these top 10 industries cover at least two employees who receive the median industry salary.
As you can see in the above graph, the industries in the top 10 for PPP assistance vary widely in terms of the number of Paycheck Protection Program loans they received and the overall loan amount.
But, as we’ll see when breaking down each industry, the number of employees covered per industry is dependent on the relationship between the average loan amount and the industry’s average salary. The lower the salary, the more businesses are able to stretch the average loan, increasing the number of employees covered. This determines our ranking. If a business owner receives a PPP loan that is less than expected or needed, he or she can also appeal to their insurance company for reimbursement of lost revenue. Another option is to find a new business insurance company to reduce insurance rate costs. Now, check out our ranking of the 10 industries that benefited from the Paycheck Protection Program the most. #10 – Utilities
The utilities industry comes in at No. 10 on this list of the top 10 industries that benefited the most from the Paycheck Protection Program. Utilities is a strange mix in the top 10: The PPP has issued the fewest number of loans to this industry, with the corresponding lowest total loan amount overall. But the amount awarded per individual loan gives it the third-highest average loan amount. The utilities industry ranks at No. 10 in the top 10 industries for Paycheck Protection Program assistance because its mean salary is the third-highest for all industries. The largest occupation in the utilities industry is electrical power-line installers and repairers, followed by control and valve installers and repairers and first-line supervisors and managers of mechanics, installers, and repairers. If you’re a business owner who still needs more money after receiving a Paycheck Protection Program loan or needs money to cover personal expenses but doesn’t know where to start, check out our loans questions page that contains a list of articles about the loan you are interested in. #9 – Health Care and Social Assistance
The health care and social assistance industry comes in at No. 9 on our ranking of the top 10 industries that received assistance from the Paycheck Protection Program. It is a mix of contrasts as well: the health care and social assistance industry received the most assistance out of every industry at $67.3 billion. But it also received the third-largest number of loans, making its average loan amount ninth out of all industries. Because its mean salary is ranked 11th overall, the health care and social assistance industry comes in at No. 9 out of all industries in our ranking.
Licensed practical and licensed vocational nurses and medical and health services managers come in as the second-largest and third-largest occupations, respectively. #8 – Construction
Construction comes in at No. 8 on this list with a mix of a large amount of PPP support and a medium mean salary that stretches those dollars a little more than 12 of the other industries. It ranks in the top four for both the total award amount and number of loans received. For the total award amount, it ranked third with $65 billion of Paycheck Protection Program assistance issued to businesses in the construction industry. It fares well in the average loan amount, ranking seventh.
Of the top three occupations in the construction industry, none reach more than 1 million like the top occupations for other industries. The three are construction laborers (867,000 workers), carpenters (662,000 workers), and electricians (527,000 workers). Of course, it’s not just companies that are struggling financially during this period of upheaval and hard economic times. Workers, too, are obviously affected, and even with stimulus checks, unemployment, and a temporary halt in evictions, money can be tough to come by. There are some solutions to the situation, including securing a personal loan even while unemployed. While it’s not a given, it is possible in some cases and can cover your expenses and bills for a certain amount of time. In these economic circumstances, there is another option: the payday loan. Many banks will offer a payday loan to someone unemployed if they are receiving unemployment benefits, can provide collateral for the loan, or can pay off the payday loan with a credit card. #7 – Educational Services
Educational services comes in at No. 7 on this ranking of the top 10 industries for PPP assistance. It is slightly better than some of our other industries when it comes to the total award amount for the industry and the number of Paycheck Protection Program loans it has received. What moves it into the No. 7 spot is a high average amount per loan and a low mean salary compared to other industries. With both the total award amount and the number of Paycheck Protection Program for all industries, the educational services industry is in the bottom six. However, its average loan amount is ranked sixth for all industries. Business owners in the educational services industry can do more per dollar from their loans than 13 other industries because it has a low average salary compared to its average loan amount. The top three occupations in the educational services industry have over 1 million workers:
After those three occupations, there is a big dropoff to middle school teachers and education administrators for elementary and secondary schools. The statistics for those occupations include private-sector employees and those employed by the government. Even though the educational services industry is in our 10 of the industries that have benefited the most from the Paycheck Protection Program, there still are educators and people within that industry who likely still lost their income and are relying on unemployment or nothing at all. This is a serious situation, but there are solutions such as personal loans or payday loans like we have covered. One situation someone should never do is borrow money from an individual online. At best, the individual can continue raising interest rates whenever they want. At worst, you can be subject to blackmail. #6 – Retail Trade
The retail trade industry comes in at No. 6 on our ranking of the top 10 industries for Paycheck Protection Program assistance. While it ranks in the top six for both total loan award amount and the number of loans it received, its average loan amount was actually 14th out of all industries. The dollars from the average retail trade loan can stretch a lot further because it has the third-worst average industry salary. This vaults it up to the No. 6 position for industries receiving Paycheck Protection Program assistance in the country. Out of all the professions in the retail trade industry, retail salespersons were the largest, making up around 4 million workers. Cashiers were next with around 3 million workers, and store clerks and order fillers came in third with around 1.4 million workers. Retail workers, because their salaries or hourly pay is so low, may suffer even more when it comes to difficult economic times as money is already tight before the turn in the economy. For retail workers who own a home, an option of gaining more money is to talk to an investor about carryback financing or a second mortgage, especially if the retail worker has bad credit. #5 – Admin/Support, Waste Management, & Remediation
The administration, support, waste management, and remediation services industry comes in at No. 5 for our top 10 industries for PPP assistance. It is a little more consistent in terms of its rankings. It scores ninth or above in total award amount and the number of loans received and is in the top 12 when it comes to the average loan amount.
Businesses receiving Paycheck Protection Program loans in the administration, support, waste management, and remediation services industry can stretch their loans a little bit further compared to 15 other industries, saving on average 2.62 jobs. In this industry, janitors and cleaners except for maids and household cleaners are the largest occupations with 970,000 workers. Security guards are second at 720,000 workers, and laborers and freight, stock, and material movers come in second with 690,000 workers. Recent studies have shown that the coronavirus pandemic has created two Americas: one where money is hard to come by and another where people are benefiting from the pandemic or at least hanging even financially. This is occurring especially in the housing market, which is flooded with people buying homes. If you are thinking about buying a home, one aspect of your finances that banks measure is called your debt-to-income ratio, or how much of your income goes to paying off debt. Too high of a debt-to-income ratio increases the chances the borrower will default on the loan. This limit depends on the lender, with some banks having different cutoff points than others. #4 – Wholesale Trade
The wholesale trade industry comes in at No. 4 for our ranking of the top 10 companies for Paycheck Protection Program assistance in the United States. It combines a small number of loans received with a high total award amount, which gives it a high average loan amount. Its average loan amount at $165,793 ranks fifth out of all industries and combined with ranking 8th for average salary at a $59,110 average salary, brings it up to No. 4 overall for jobs saved at 2.8. The video below covers the basics of the Paycheck Protection Program and how business owners can take advantage of it while having their loans completely forgiven. Now, it’s time to take a look at the employment numbers in the wholesale trade industry. The three largest occupations in the wholesale trade industry may seem familiar. We’ve talked about them in other industries before:
The average percentage of workers that are either members of a union or represented by a union is around 5 percent. While the unemployment rate for the wholesale trade industry reached 7.9 percent during May, the industry has rebounded slightly, lowering the unemployment rate to 5.9 percent as of August. #3 – Mining
The mining industry comes in at No. 3 on our list of the top 10 industries that received PPP assistance. It is certainly a strange industry compared to the others: To this date, it has received the fourth-smallest number of Paycheck Protection Program loans, along with the fourth-smallest overall PPP amount. It also has the second-highest average award amount at $209,000 and the sixth-highest mean salary out of all industries analyzed for this study. That brings it to the third position in this ranking of the top 10 industries for Paycheck Protection Program assistance. While the Bureau of Labor Statistics doesn’t have any information readily available for occupations in the mining industry, it has the number of people per occupation for the larger category — mining, quarrying, and oil and gas extraction.
The second-largest is first-line supervisors and managers of construction trades and extraction workers. The third-largest is operating engineers and other construction equipment operators. Mining is synonymous with West Virginia, often pictured with a group of men with hard hats and pickaxes entering a tunnel into a mountain to spend the day there mining coal. Unfortunately, it is possible for mining workers, like most people during this pandemic, to face financial issues due to job loss or restricted hours. One option for beating this is to find personal loans in West Virginia to cover expenses. Even though these might not be forgivable like the PPP loans, they could make the difference between paying bills or severe financial difficulty. #2 – Accommodation and Food Services
The accommodation and food services industry comes in at No. 2 in our top industries that benefited the most from the Paycheck Protection Program. It ranks outside the top 10 for the size of its average loan and for the industry’s median salary. However, its average number of workers at the median salary covered by the average industry loan is 4.09. This is good for the No. 2 spot in the country.
The second-largest group is waiters and waitresses, followed by cooks. Overall, more than 7 million people are employed in the accommodation and food services industry. Restaurants and food services stores are found almost everywhere in America, but one city that stands out is New Orleans with its varied and delicious food. Restaurant and food-service employees — in New Orleans and the rest of the country — have faced extreme financial hardship as their jobs are in-person and the stay-at-home orders shuttered stores for months. There are financing options for workers in need, such as loans in New Orleans that can help cover bills and expenses until the worker gains income again. A worker might get a great interest rate as well, depending on their credit score. #1 – Manufacturing
Manufacturing is our first industry that scores high in almost every category. It is ranked No. 1 overall and comes in the top 9 for both the total award amount for the industry and the number of loans received in the industry. It has the overall top ranking for the average loan amount: $235,214, or roughly $26,000 higher than the second-ranked industry, mining. The manufacturing industry moves into the first spot in part because it ranks 12th in average salary compared to the other industries. The largest occupation in the manufacturing industry is team assemblers, which account for over 1 million workers in the industry. The next two largest occupations are considerably smaller — inspectors, testers, sorters, samplers, and weighers at 365,000 workers and machinists at 317,000 workers. If you were to think of Michigan, one of the places you might think of first is Detroit, the Motor City. Manufacturing is a large industry in that city, employing hundreds of thousands of people. Although manufacturing is the No. 1 industry that benefited from the Paycheck Protection Program, the workers in that city were asked to stay home in early 2020 as coronavirus spread quickly throughout the city. Finding the best loans in Michigan can aid workers who need more money to keep a roof over their heads or to provide food for their families. Breaking Down All Major Industries by PPP ImpactWe’ve covered the top 10 industries for Paycheck Protection Program assistance, starting with the accommodation and food services industry and ending with the construction industry. If there were commonalities between those 10 industries, most, if not all, had very good scores in the average amount per loan and great scores in the mean salary for that industry. This created our metric — the number of jobs the average loan to the industry would save if the salary for those jobs were equal to the mean salary for that industry. But what about the other 10 industries that we looked at? Now, we’ll start off our breakdown of all 20 industries by looking at the number of employees and the average salary for each industry. We’ve already seen the PPP assistance at the beginning of the article. This should give you an idea of how those award amounts fit in with the number of employees and the average salary for each industry. View as image As you can see, the three industries with the largest number of employees are public administration, health care and social assistance, and retail trade. None of those have particularly large salaries. In fact, retail trade has the third-lowest average salary at around $34,900. The three industries with the largest salaries are the management of companies and enterprises, professional, scientific, and technical services, and utilities. However, only one of those industries has more employees than the median for all industries (professional, scientific, and technical services).
Now, scroll down to take a look at each industry’s overall Paycheck Protection Program loan amount versus how much per year the industry spends on payroll in the graph below. The last part is calculated by multiplying the number of employees in an industry with the average industry salary. View as image Of the companies in the top 5, none of them reach the upper echelon of the highest paying industries, but they are not all in the lower bracket as well. Of course, the industry average is very tilted toward the agriculture, forestry, fishing, and hunting industry, which has had over 50 percent of the salaries in its industry covered under the total PPP loan amount. Eight of the industries are between 8.5 percent and 5.5 percent. Why is the agriculture, forestry, fishing, and hunting industry not in the top 10 of our industries that benefited the most from the Paycheck Protection Program? The key issue is the number of loans. Each loan in the agriculture, forestry, fishing, and hunting industry covers just 1.7 jobs, a much smaller total than for the top 10 industries in our ranking. Because this was the metric we used to determine our ranking, the agriculture, forestry, fishing, and hunting industry, actually falls all the way to 15th out of the 20 industries. The industries with the lowest Paycheck Protection Program loan amount per payroll are all in fields where the average salary is very high. The industry with the lowest average salary in the bottom 5 is the education industry at a $58,100 average salary. Here is a complete look at all of our five categories for each industry in the table below. [table “2” not found /]As you can see, the range between the top-ranked industry and the lowest-ranked industry in each category is spread out quite a bit. The professional, scientific, and technical services industry has received 640,000 loans, for instance, while the utility industry has only received 7,900. The gap between the industry with the largest total amount awarded from the PPP versus the industry with the smallest is $65.9 billion. Even a comparative measure like the average amount per loan per industry has a large range, with a $180,000 difference between the top-ranked industry and the bottom-ranked. The highest average salary is $85,720 in the professional, scientific, and technical services industry, and the lowest is $27,980 in the accommodation and food services industry. Of course, it’s the relationship between all these statistics that makes up our metric and the way we judged each industry and created a ranking.
Delaware is a small state that received a smaller number of PPP loans than many other states but is also a major hub for businesses because of its business-favorable laws and courts. Outside of the PPP, there are other loan options in Delaware that can help everyday workers who have lost jobs or income during the pandemic. The Insurance Industry and the Paycheck Protection ProgramThere were numerous industries that not just survived the coronavirus pandemic but actually gained more profit. One of those was the technology industry, where tech giants saw a spike in revenue as much as 34 percent, according to Statista. One of those industries was the insurance industry. The insurance industry might not be flashy, but it was still needed throughout the pandemic as people struggled with health and life insurance policies during the pandemic. When trying to break down the insurance industry segments, we first needed to separate the insurance industry from its larger category: the finance and insurance industry. The following graph shows the finance and insurance industry in terms of the number of loans it has received, the total award amount, and the other three categories we looked at when ranking industries according to how much PPP assistance they received.
The finance and insurance industry received a middle-to-low amount of loans and overall loan total. However, it ranked fifth to last in its average loan amount and fifth highest in the average industry salary. Because of that, the finance and insurance industry had the lowest employees covered per loan total and the only industry with an employees-covered rate that was less than one. Perhaps this is not surprising given the performance of the finance and insurance industries in the market, which, at least in terms of insurance, came out with positive revenue during a time when most industries were struggling.
To see how the insurance industry specifically benefited from the PPP program, we broke down the insurance industry by segment to see which parts of the insurance industry received more loans or had a higher average loan amount. The graph below shows the different segments of the insurance industry and which received the most loans. Insurance agencies and brokerages received the most loans by far at around 4,600. The rest of the insurance industry segments received around 300 or fewer loans.
How did the insurance industry segments fare per loan? For this analysis, we looked at direct Small Business Administration data to isolate the insurance industry from its larger category — finance and insurance. The SBA had data for different sectors of the insurance industry from insurance agencies and brokerages to claims adjusting. The data was set just for loans above $150,000. The PPP loan amounts were in a range: $5-$10 million, $2-$5 million, $1-$2 million, $350,000 to $1 million, and $150,000-$350,000. For the purposes of this analysis, we took the average value for all loan ranges to come up with a rough estimate of the average loan for companies receiving loans above $150,000 ($7.5 million for the $5-$10 million range, for instance). The following table shows those average loan amounts for 10 insurance categories, along with the number of loans businesses in those categories received. [table “1” not found /]The results varied significantly when it came to the average loan amount, with the top subcategory of insurance “Third Party Administration of Insurance and Pension Funds” receiving on average loans at $903,000 and the bottom subcategory “Insurance Agencies and Brokerage” receiving on average loans at $500,000. The number of loans was consistent for almost every subcategory, with the difference being insurance agencies and brokerage, which had essentially 4,000 more loans than the closest subcategory. Only one subcategory, reinsurance carriers, received fewer than 100 loans, coming in at 18. How COVID-19 Affects Home, Life, and Auto InsuranceAs mentioned in the previous section, the insurance industry was one of the few industries that not only didn’t take a hit from the coronavirus pandemic but actually grew in revenue. Why did this happen? When it came to property and casualty insurance companies, the big windfall came from car insurance companies still collecting rates while auto accident frequency dropped significantly, as already cited from Insurance Insider.
Health insurance and life insurance companies faced some predicaments: With something as novel as a pandemic, what role would they play in covering medical treatment costs or insuring people who were at a high risk of dying if they contracted the virus? COVID-19 affects business insurance policyholders as well. One example is business interruption insurance, which generally reimburses a business owner for lost wages if their business is shut down for a reason outside of their control, like a government shutdown or weather damage. But, because insurance companies almost always include a line in their customers’ policies that business interruption insurance doesn’t apply during pandemics, business owners were left with no money. This has set up fights between business owners and insurance companies in courts throughout the United States on whether business owners needed to be reimbursed for the time their stores were shut. While business owners fight with insurance companies, many still benefited from the Paycheck Protection Program. Workers, however, might not have. Head to our state-specific pages — such as loans in Rhode Island — to find a loan company near you to give you more financial security to get you through these difficult times. How the PPP has Helped to Keep the U.S. Economy AliveWe’ve seen the top 10 industries for PPP assistance, as well as looked at all industries and how they compare against one another. We dove deep into the insurance industry and how it took advantage of the PPP and managed the coronavirus pandemic. The PPP in general has supported small business owners and kept many businesses alive. There were few stipulations when it came to having the loans forgiven.
With quick action, Congress, the Treasury, and the Small Business Administration worked to keep small businesses alive. Time will tell about how the PPP affected different industries, however. Challenges and Benefits of the Paycheck Protection ProgramWe’ve gone over the 10 industries that benefited the most from the Paycheck Protection Program. We’ve touched on the insurance industry and how the PPP and the coronavirus pandemic have impacted different aspects of the insurance industry, from auto insurance to health insurance. Now, read some takes from four thought leaders about what they’ve seen happen with the PPP, both positively and negatively, and how, at the end of the day, many businesses were saved by it.
“We work specifically with accountants and bookkeepers, and they played a crucial role in getting millions of dollars of funding to themselves and their clients using our small business financing platform that we re-engineered to handle PPP demand. Most accountants were helping multiple small businesses going through the process. Our business lending app allowed them to determine the eligibility of their clients and collected required documents in a streamlined, automated manner. The program was great though we feel the PPP to be a bit unfair: Many businesses had almost no impact of the COVID-19 that still were qualified for the funding. We noticed that most accountants were super busy and working long hours and they all qualified, but many hard-working small business owners didn't because they didn't structure their compensation in a way that fit the criteria of the Paycheck Protection Program.
I once talked to an accountant, and most of his clients were in the restaurant industry. His business evaporated overnight along with his clients. His businesses didn't even have cash for two full weeks. There was no hope for him to recover his accounts receivable, and for him required money just came right on time. As a facilitator of Paycheck Protection Program loan applications, it was great to hear small business survival stories.”
What challenges have businesses in your industry faced during the coronavirus pandemic? “COVID-19 brought forth a major logistical challenge in terms of supply and demand for respiratory products. We saw an increase in demand for sanitation and CPAP products we had to scramble to meet. This meant reaching out to our long-list of suppliers and seeing who could meet the demand. If no one on our list could, we'd then have to do further research on alternative suppliers. We've also seen a dip in mobility aids such as rollators and wheelchairs. This is because many people are holding off on surgeries due to fears of coronavirus. While there has been a dip in this, we've also seen a rise in light therapy lamp purchases. We've gathered this is because everyone has been stuck inside and unable to get the necessary sunlight. We're expecting a significant rise in seasonal depression cases this fall and winter because of COVID-19.” How has your industry adapted in response to the economic changes during the coronavirus pandemic to keep customers? “Providing the right products promptly has been the adaptation we've had to make. There's been a surge in demand for pulse oximeters, UV sanitizers, face masks, and more. While we did already carry a few of these products, we did have to find suppliers for the products we didn't carry, test them for quality and effectiveness, and streamline our product launch process. This meant having our team dedicate themselves to ensuring we secured the right suppliers and battle-tested them for quality in a timely manner.
With the surge in light therapy lamp demand, we've made sure to order 80 percent more therapy lamps than the previous year. While light therapy lamps are in high demand during the fall and winter seasons, we highly suspect a significant surge this year. People cannot get outside, be social, and get to the gym, which are critical practices for overcoming seasonal affective disorder.”
How has the Paycheck Protection Program affected your industry? “According to the American Bar Association, a large percentage of law firms that applied for loans under the federal Paycheck Protection Program that applied for forgivable loans under the program were not approved. Small and mid-sized law firms that applied were mostly denied access to the PPP funds, while larger law firms were much more likely to be able to obtain access to the PPP funds.” What challenges have businesses in your industry faced during the coronavirus pandemic? “Many law firms in the legal services industry rely upon face-to-face communication with clients and access to an open and functioning court system. Most law firms rely on face-to-face communication with other lawyers as a normal course of business. When the pandemic forced the shutdown of all commercial buildings in major metropolitan cities, it prevented basic communication among co-workers, which is critical to the flow of information that is so important in the legal services industry. The ability to meet prospective clients, discuss and manage existing cases, and go to court was abruptly stopped. Lawyers were unable to file paperwork with the courts, which were mostly closed unless the matter was considered exigent and granted special permission for motion papers to be filed under emergency circumstances with the court.” How has the Paycheck Protection Program helped businesses in your industry survive and grow during the pandemic? “The Paycheck Protection Program allowed law firms to continue to meet monthly expenses when cash-flow was impacted by an almost complete shutdown of business. Law firm business temporarily ground to a halt as the court system closed down and marketing efforts to solicit new clients were suddenly halted as the urgency of the pandemic caused most businesses to simply grind to a halt.” How has your industry adapted in response to the economic changes during the coronavirus pandemic to keep customers? “The legal industry has adapted with an increased reliance on virtual communication technologies that allow for video conferencing online. Marketing efforts have shifted to online lead generation for obtaining new clients with a reliance on online marketing software to manage these new clients leads. Project management software that can be remotely accessed online has replaced internal company intranets.” How have businesses in your industry used the Paycheck Protection Program loans to benefit their employees? “The federal relief established by the Paycheck Protection Program under the CARES Act specifically requires that in order for a loan to be forgiven that small businesses must use 75 percent of the funds to meet payroll expenses. This percentage was later dropped to 60 percent, but still, the benefit to employees under the PPP is instrumental in making sure that a law firm can meet their payroll.” Have some industries benefited more than others from the Paycheck Protection Program and, if so, why? “Some industries have benefited more than others from the Paycheck Protection Program depending on whether the business operation is labor-intensive or not. Businesses that have a large payroll are much more likely to be able to obtain a Paycheck Protection Program loan. Small businesses that do not have many employees on their payroll will have a much harder time obtaining approval for a Paycheck Protection Program loan.” If there was one thing you could change about the Paycheck Protection Program to benefit your industry or a particular industry, what would it be and why? “The most problematic thing about the Paycheck Protection Program is the ambiguous rules for obtaining the loan and using the funds properly.
A smaller law firm has a more challenging time applying for and also complying with the PPP rules because the nature of a small law firm is that they likely do not have a compliance team in place to monitor how the monies are spent. Most solo practitioners and small law firms are already stretched to capacity and have limited resources to assure compliance with byzantine and complicated rules.”
What challenges have businesses in your industry faced during the coronavirus pandemic? “Unfortunately, the government-mandated shutdowns in response to COVID-19 began in many states in early March and April. This is when many landscapers and lawn care professionals finally began to get back to work after a long (mandatory) winter break. Lawn care is seasonal work. You can't mow a lawn or tend to a garden when it is too cold for plants to grow. In my experience, the biggest challenge that I saw lawn care and landscaping companies face during the pandemic was confusion about what was and was not allowed. Many lawn care company owners were confused by what the mandates in the shelter-in-place orders meant, and whether they were allowed to operate their businesses or not. Some company owners simply stopped operating their businesses early into the mandates. The crazy thing was that most states always allowed lawn care companies to operate. With the exception of Michigan outright shutting down lawn care company operations, I don't believe any other state actually demanded a shutdown of our industry. But, unfortunately, many business owners felt it was better safe rather than sorry and simply ceased operation for a few weeks. This had to have an impact on the companies that decided to do so, especially those only a few years into operation — most of which likely had little capital after the winter.” How has your industry adapted in response to the economic changes during the coronavirus pandemic to keep customers? “In response to the coronavirus pandemic, I believe that the companies that survived only became more resilient. Being resilient is already one of the biggest traits of a successful lawn care company, and being able to adapt to challenges is in the nature of lawn care. For example, weather, broken equipment or vehicles, and even a lack of desire to move forward are already hurdles a successful lawn care company needs to overcome.
If a company chooses not to mow a lawn for any reason — and another company will — the company that stalled will lose ground … and customers, whether it's in response to coronavirus, or the weather report.” If there was one thing you could change about the Paycheck Protection Program to benefit your industry or a particular industry, what would it be and why? “The biggest problem with the Paycheck Protection Program (PPP) is the slow responses. If the government is going to mandate that businesses close, and in return offer them compensation, it needs to do so in a timely manner. As a result of the slow payment response, many lawn care and landscaping companies — especially those in Michigan — lost everything before ever receiving financial aid.”
Douglas Dedrick is the founder of ThisAmericanLawn.com. How has the Paycheck Protection Program affected your industry? "When COVID-19 hit and this offering became available, everyone was somewhat uncertain of the impact it would have. At Cavignac, we connected with a lot of our industry peers, and the general consensus was that it was better to apply and have the money if the need was there than to not apply and later realize you did need it.
In terms of the insurance brokerage business, the impact has not been as bad as we were expecting. That said, 2021 will be challenging in the sense that as payroll decreases and sales decrease, business decreases as well. With construction businesses in particular, it's important to look at backlogs for future planning. Any dollars that may have been set aside for the future fall into that category and the backlog is going to be lower heading into 2021 than it was heading into 2020." What challenges have businesses in your industry faced during the coronavirus pandemic? "The HR issues that arise from COVID-19 are massive and have proven to be a massive challenge. We're lucky to have a local HR consultant that is able to help advise clients as this is an asset many of our competitors do not have. Being responsive to and educating clients on HR-related issues that they may face is incredibly important. In addition to HR issues, safety and claims management are also important. It is always better to reduce the frequency and severity of a loss exposure than deal reactively with a claim after it has happened.” How has the Paycheck Protection Program helped businesses in your industry survive and grow during the pandemic? "The Paycheck Protection Program has given businesses the confidence to keep people on board when they otherwise may have been laid off. Without the program, it's very likely that a lot of companies that did benefit from it would look very different than they do today. We are lucky that we have not been faced with those decisions, but the program has been crucial for the survival of many companies in the industry." How has your industry adapted in response to the economic changes during the coronavirus pandemic to keep customers? "Now more than ever, it's important to reach out to clients and prospective clients and make sure they are aware of the resources we have. We want our clients to know that we're here to support them and understand that the model for success during this time is not 'one size fits all.' What works for someone might not work for the next person, and it's important to have a thorough understanding of what the client needs in order to advise them appropriately." How have businesses in your industry used the Paycheck Protection Program loans to benefit their employees? "This program has given businesses an avenue to maintain payroll and maintain jobs that might not exist otherwise." Have some industries benefited more than others from the Paycheck Protection Program and if so, why? "Absolutely. Take the restaurant and hospitality industries, for example. Restaurants have gone through a cycle of ups and downs with seating and capacity rules, among many others and have faced a very high level of uncertainty in terms of business recovery. Without PPP assistance, a lot of people would have been laid off a long time ago, and the assistance has really helped a lot of these businesses offset the impact of the decline in business. On the other side of that, when that funding does run out, more people will be out of work, and it has become difficult to bring them back due to the stimulus and unemployment benefits paying more than their jobs in some scenarios." If there was one thing you could change about the Paycheck Protection Program to benefit your industry or a particular industry, what would it be and why? "To be honest, I wouldn't change much. I thought the process to qualify for the loan was relatively straightforward, though I do think it would have been nice to have a clearer understanding of how it works. That said, the priority here was to get the funds out as quickly as possible so businesses could start utilizing them to adapt to the new normal. Fortunately our business hasn't needed the funds the way smaller businesses like restaurants and delis, gyms and nail salons have. It's important that businesses struggling the most are able to receive as much support as possible."
Frequently Asked Questions: Paycheck Protection Program ExplainedNow that we’ve covered our top 10 industries for Paycheck Protection Program assistance and the PPP’s impact on the insurance industry, we’ll answer some of your frequently asked questions. The topics covered include:
And more. Scroll down for our analysis and answers. #1 – Is insurance covered by the PPP?According to the Small Business Administration, employers are only able to use PPP loans to cover insurance premiums if those premiums are part of a group health plan for that business’ employees, and a group health plan that the employer pays for. If that’s the case, an employer can use the Paycheck Protection Program funds to pay for those premiums if they occur within the covered period or the alternative payroll covered period. #2 – What is PPP loan insurance?PPP loan insurance is a type of insurance offered to small businesses that protects them if the federal government later rules that the businesses are not eligible for a PPP loan, even after receiving one. Some go even further and protect a small business if their loan is not forgiven. #3 – What businesses qualify for the Paycheck Protection Program?Most small businesses qualify for the Paycheck Protection Program, though there are some exceptions. Small businesses that are lenders, passive businesses, sell life insurance, owned by an undocumented immigrant, and employ pyramid schemes are all not eligible for a Paycheck Protection Program loan. #4 – How can I get my PPP loan forgiven?To have your PPP loan forgiven, you need to follow the strict guidelines of the loan: using 75 percent of the loan for payroll and spending the remaining money on qualified expenses like rent payments or utility bills. Document everything and be sure not to reduce any employee’s salary by more than 25 percent. This puts you in a position to have your entire Paycheck Protection Program loan forgiven. If you suspect you might not be able to get your PPP loan forgiven, you can talk to an insurance company about PPP loan insurance to protect you financially if you’re forced to pay part or the full amount of the loan back to the federal government. #5 – Can small businesses get a second PPP loan?With a new stimulus bill passed in December 2020, the Paycheck Protection Program will reopen, with the option for some businesses to apply and receive a second PPP loan. The bill has more lenient requirements as well, just requiring 60 percent of the loan to be used on payroll. #6 – What can I use my PPP loan for?Congress, which created the PPP, gave the SBA responsibility to set the guidelines for PPP loan usage. You can use your Paycheck Protection Program loan for a few needs: payroll, rent or mortgage payments, and utility bills. For the first stimulus bill, 75 percent of your PPP loan must be used on payroll. With the second stimulus bill passed in December 2020, just 60 percent of a business’s PPP loan needs to be used on payroll. #7 – What are considered payroll costs for the paycheck protection program?Payroll costs are measured through one of two factors: They can be based on the cost of payroll for the earlier part of 2020 before the novel coronavirus hit the United States or a similar period back in 2019, judging payroll based on the payroll expenses a year ago. In addition, payroll covers certain types of employee expenses like employee vacation and sick leave. #8 – Who benefits from the Paycheck Protection Program?The Paycheck Protection Program is designed to benefit small businesses — those with 500 employees or less. It also benefits self-employed workers and independent contractors who may have had their income decreased significantly or lost altogether. #9 – How does the Paycheck Protection Program affect unemployment benefits?The Paycheck Protection Program allows business owners to pay their employees’ salaries up to 100 percent of those salaries but not less than 75 percent. If the business owner uses less than 75 percent on payroll, they would have to pay some of the loan back, losing out on the PPP’s complete forgiveness policy. If the business owner pays a worker over a certain percentage of their salary, they will lose part of their unemployment benefits, which may be higher than their pay to begin with. Work-sharing programs can bypass this issue, allowing workers to receive unemployment and part of their paychecks at the same time. This also allows the business owner to receive forgiveness for the loan. Due to the second stimulus package passed in December 2020, business owners just need to use 60 percent of their PPP loan on payroll to have the loan completely forgiven. #10 – How much does the Paycheck Protection Program pay?For each employee, the PPP award amount cannot be larger than $100,000, spread out over a 24-week or eight-week period. Because this applies just to one employee, a company might receive millions of dollars in a single PPP loan, depending on the number of employees that are in the company and their salaries. The amount depends on the lender, which holds the keys for who receives PPP loans and for how much. The SBA has put them in charge of dispersing loans, essentially putting the PPP money in their hands. #11 – Do you have to pay back the Paycheck Protection Program?If you meet the PPP stipulations, such as spending at least 75 percent of the loan on payroll and the remaining money on approved costs, a business owner can have the PPP loan completely forgiven. Methodology: Ranking the Top Industries by PPP AssistanceTo determine the best industries for Paycheck Protection Program assistance, our experts looked primarily at two sources. One was the U.S Department of the Treasury, which gave information about the total award amount for each industry along with the number of loans that the industry had received. The other source was the Bureau of Labor Statistics. This government agency gave information about the mean salary, which was used to determine the reach of each PPP loan. Our analysts’ main metric was how many employees per industry were covered under the average PPP loan for that industry, if those employees had the mean salary for the industry. For how the Paycheck Protection Program affected the insurance industry, our researchers looked at Small Business Administration statistics that showed the number of Paycheck Protection Program loans an industry received if those loans were above $150,000. Our analysts organized the companies by the North American Industry Classification System, which gave us knowledge about specific parts of the insurance industry such as insurance agencies and brokerages compared to claims adjusting companies, for instance. Those data points amounted to 1,325,044. Although our experts did not use this source for this study, the Small Business Administration provides a breakdown of PPP loans by demographic information and location. While it does not include a specific list of Paycheck Protection Program recipients, you can still check out loans by industry, the gender of business owners, loan amounts, and more. Our researchers have used these SBA PPP statistics for our other PPP studies. Recently, the COVID-19 PPP program will be opened again in early 2021.
Among other Paycheck Protection Program updates, business owners are only required to use 60 percent of the new loans on payroll, rather than the previous 75 percent. The post Paycheck Protection Program - Top 10 Industries Benefited [+ Loan Amounts] first appeared on Loans.  |
Chris Chan is the founder & CEO of 
Yungi Chu is the owner of 
Julia Spahiu is the founder and CFO of 
Dr. Nick Oberheiden is an attorney and the founder of 
| You are subscribed to email updates from Loans. To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google, 1600 Amphitheatre Parkway, Mountain View, CA 94043, United States | |
No comments:
Post a Comment