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Coronavirus business loan statistics

With 84% of small businesses worried about shuttering, owners are turning to SBA funding.

Closed due to coronavirus sign

The coronavirus outbreak has had an unprecedented impact on small businesses. Before the pandemic, the main reason businesses took out loans was to grow. But now, most are turning to Small Business Administration (SBA) loans in the hopes of keeping their business open.

In fact, the SBA received such a high volume of applications for its Paycheck Protection Program (PPP) that it ran out of funding in less than two weeks. It had to halt applications until an interim relief bill gave the program another round of funds on April 24, 2020.

How has COVID-19 affected small businesses?

It’s hard to overstate the impact of COVID-19 on small businesses in the US. Some 90% of businesses have lost revenue since the start of the outbreak, according to a survey by Main Street America. And about 57% said that revenue had decreased by more than 75%.

This is largely a result of social distancing policies. When state and local governments started ordering nonessential businesses to close their doors, it forced businesses to shift the way they operate if they wanted to stay open. And essential businesses aren’t immune. A shortage of healthy staff working for essential businesses has caused supply chain disruptions that have affected 32% of small businesses.

How long do businesses think they can stay open?

Nearly 84% of small businesses are concerned about having to close due to the coronavirus outbreak, according to the Main Street America survey. Close to 66% of small businesses surveyed expect to close within the next five months if the outbreak continues. And about 6% don’t have funding to stay open for a full month.

How long small businesses think they can stay open during the coronavirus outbreak

Less than 1 month

5.63%

1 to 2 months

26.28%

3 to 5 months

34.07%

5+ months

17.62%

Not a concern

16.39%

Source: Main Street America’s 2020 Small Business Survey: The Impact of COVID-19 on Small Businesses

What type of financing do business owners want during the COVID-19 outbreak?

Your standard business loan doesn’t cut it under these circumstances, where businesses are worried about taking on debt they won’t be able to repay.

Most business owners favored direct cash payments to individuals as a business relief program, according to a survey by the U.S. Chamber of Commerce and MetLife. Cash payments can supplement salaries while revenue is low — and don’t have to be repaid.

This option was followed by government loan programs and a cancellation of payroll taxes.

Type of financing business owners want during the COVID-19 outbreak

Direct cash payments to every American

56%

SBA disaster loans

30%

Temporary cancellation of business payroll taxes

21%

SBA loans that waive the find-credit-elsewhere requirement

20%

Source: MetLife and U.S. Chamber of Commerce Special Report on Coronavirus and Small Business

What types of costs do small businesses need help covering?

Businesses are struggling to cover basic costs. Over half are worried they won’t be able to cover their rent or mortgage payments. And over a third are concerned they won’t be able to make payroll. This is followed by around 31% that need help covering the cost of inventory and supplies.

Costs small businesses need help covering

Rent or mortgage payment

54.54%

Payroll

36.27%

Inventory and supplies

30.55%

Source: Main Street America’s 2020 Small Business Survey: The Impact of COVID-19 on Small Businesses

Where are business owners researching financing options?

Business owners in the South appear to be searching for funding more than owners from other regions — some 38% of traffic to Finder’s coronavirus business loans pages came from southern states. And business owners in the Midwest made up the smallest percentage of traffic, clocking in at just 15%.

Organic traffic to coronavirus business loans pages by region

South

38.46%

West

26.38%

Northeast

19.68%

Midwest

15.48%

Source: finder.com

Even though states in the Northeast and West were the first to shutter nonessential businesses, that hasn’t necessarily affected the need for funding by region.

But when you look at traffic by states, it tells a different story. California, which was the first state to issue a shelter-in-place order, accounts for the largest share of traffic by state at 14% — more than double the traffic from most states. This was followed by Florida at around 9%, and Texas and New York — both at 8%

Organic traffic to coronavirus business loans pages by state

Alabama

1.24%

Alaska

0.14%

Arizona

2.28%

Arkansas

0.54%

California

14.71%

Colorado

1.98%

Connecticut

1.22%

Delaware

0.18%

District of Columbia

0.13%

Florida

9.42%

Georgia

4.09%

Hawaii

0.45%

Idaho

0.41%

Illinois

3.52%

Indiana

1.19%

Iowa

0.63%

Kansas

0.49%

Kentucky

0.72%

Louisiana

1.45%

Maine

0.35%

Maryland

1.62%

Massachusetts

2.24%

Michigan

2.46%

Minnesota

1.22%

Mississippi

0.55%

Missouri

1.5%

Montana

0.23%

Nebraska

0.31%

Nevada

0.92%

New Hampshire

0.45%

New Jersey

3.66%

New Mexico

0.49%

New York

7.58%

North Carolina

2.91%

North Dakota

0.18%

Ohio

2.92%

Oklahoma

0.93%

Oregon

1.25%

Pennsylvania

3.72%

Rhode Island

0.31%

South Carolina

1.14%

South Dakota

0.17%

Tennessee

1.88%

Texas

8.28%

Utah

0.85%

Vermont

0.15%

Virginia

3.26%

Washington

2.54%

West Virginia

0.27%

Wisconsin

0.9%

Wyoming

0.12%

Source: finder.com

The high volume of traffic also reflects the size of state economies. California’s economy is the largest in the US — and the fifth largest in the world, clocking in above many other developed countries. Texas is the second largest economy in the US, and New York is the third.

Florida might not be as large, but it is heavily dependent on retail and tourism, and has an older-than-average population than most states. Because of this, Oxford Economics predicts it will be one of the hardest hit states in the country.

What types of loans are small businesses applying for?

Business owners are overwhelmingly looking for SBA loans. Organic traffic to Finder’s article on how to apply for an SBA loan increased by 1,800% from March 2019 to March 2020. And an article on loans for businesses affected by the outbreak was Finder’s fourth most popular business loans page in March — even though it was published well into the month on March 10, 2020.

Some lenders like Kabbage have paused their standard loan programs to assist borrowers in funding through the SBA’s Paycheck Protection Program. But while the application deadline for the PPP has been extended until August 8, 2020, funding is limited. Programs like the SBA Economic Injury Disaster Loan (EIDL) are also widely sought after by businesses.

How much are small businesses receiving through the Paycheck Protection Program?

While loans through the Paycheck Protection Program can run as high as $10 million, less than half of 1% received a loan over $5 million, according to SBA approval numbers as of April 16, 2020. The majority of small businesses received $150,000 or less.

Amount of funding small businesses get through the Paycheck Protection Program

$150,000 and under

1,229,893

74.03%

$150,001 to $350,000

224,061

13.49%

$350,001 to $1 million

140,197

8.44%

$1.01 million to $2 million

41,238

2.48%

$2.01 million to $5 million

21,566

1.3%

Over $5 million

4,412

0.27%

Source: U.S. SBA Paycheck Protection Report: Approvals through 4/16/2020 at 12pm ET

Size restrictions could be one of the main reasons why funding amounts were so low for the majority of businesses. Businesses can only borrow 2.5 times their average monthly payroll costs — with compensation capped at the equivalent of a $100,000 salary per employee.

Which industries are getting the most funding?

The construction industry received the most funding compared to any other industry, followed closely by the professional, technical and scientific services industry, as well as manufacturing. The SBA loosened size requirements for accommodation and food service industry businesses, which received the fifth largest amount of funding.

Top 10 industries getting the most funding through the Paycheck Protection Program

Construction

13.12%

Professional, scientific and technical services

12.65%

Manufacturing

11.96%

Health care and social assistance

11.65%

Accommodation and food services

8.91%

Retail trade

8.59%

Wholesale trade

5.69%

Other services (except public administration)

5.17%

Administrative and support for waste management and remediation services

4.47%

Real estate, rental and leasing

3.14%

Source: U.S. SBA Paycheck Protection Program Report: Approvals through 4/16/2020 at 12pm ET

The 10 industries that received the most funding reflect businesses that have either faced supply chain shortages, were forced to close or both. One outlier is the professional, technical and scientific services industry, which includes lawyers and financial experts. They likely received a significant amount of funding because they had the expertise to navigate the PPP application process better than other business owners could.

Which states are getting the most Paycheck Protection Program loans?

Texas received the highest number of loans, followed by California, Florida and New York. The rest were mainly along the East Coast.

Top 10 states getting the most Paycheck Protection Program loans

Texas

134,737

California

112,967

Florida

88,997

New York

81,075

Illinois

69,893

Pennsylvania

69,567

Ohio

59,800

Georgia

48,332

Massachusetts

46,937

Missouri

46,481

Source: U.S. SBA Paycheck Protection Program Report: Approvals through 4/16/2020 at 12pm ET

Texas, California and New York are no surprise, given the size of their economies. And the East Coast is where the virus has concentrated — and where states are likely to have tighter stay-at-home orders. Most of these states are also home to large cities, where businesses have been hit particularly hard.

Which industries have the most approved PPP applications?

Businesses in the professional, scientific and technical services industry received the highest number of individual SBA loans, at 208,360 approved PPP applications. This was followed by small businesses in the retail industry, and the healthcare and social assistance industry.

Top 10 industries with the most loans approved through the Paycheck Protection Program

Professional, scientific and technical services

208,360

Retail trade

186,429

Health care and social assistance

183,542

Construction

177,905

Accommodation and food services

161,876

Other services (except public administration)

155,319

Manufacturing

108,863

Real estate, rental and leasing

79,784

Administrative and support for waste management and remediation services

72,439

Wholesale trade

65,078

Source: U.S. SBA Paycheck Protection Program Report: Approvals through 4/16/2020 at 12pm ET

This reflects the same industries that received the most funding through the Paycheck Protection Program — in a slightly different order. This is likely because the size of businesses in industries like professional services and retail are often smaller than, say, construction and manufacturing companies. This means they’d be eligible for lower loan amounts — especially with compensation for wages capped at the equivalent of a $100,000 annual salary per employee.

Why didn’t some small businesses apply for the Paycheck Protection Program?

Most small businesses have applied for a loan through the Paycheck Protection Program, according to a survey by the Harvard Business School. In fact, only about 6.6% of business owners surveyed said they weren’t applying for a PPP loan. The most common reasons why were that they didn’t need the funds or preferred non-debt types of financing, like grants. Only 10% of those that didn’t apply were concerned about the turnaround time.

Why some small businesses didn’t apply for the Paycheck Protection Program

Don’t need any extra cash

35%

Prefer other non-debt assistance

33%

I don’t think I qualify

30%

I don’t trust the government to forgive the loan

19%

It’s a hassle

15%

COVID-19 will last too long to repay

14%

I don’t trust the bank to forgive the loan

13%

I won’t receive money in time

10%

Source: Harvard Business School’s How are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey

These answers reflect the poorly executed roll out of the Paycheck Protection Program. The SBA changed interest rates twice, revised the application at the last minute and still hasn’t released full guidance for lenders on how to process applications and forgiveness.

Many banks expressed concerns about the program and initially only offered funding to current business customers. Add to this the fact that the program ran out of funds less than two weeks after its launch, and it’s easy to see lenders weren’t far off in their apprehension.

For media inquiries:

Allan Givens
Public Relations Manager
203-818-2928
allan.givens@finder.com

/in/nicole-gallina/

Nicole Gallina
Communications Coordinator
347-677-4931
nicole.gallina@finder.com

/in/nicole-gallina/

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