Today the Small Business Administration and Treasury Secretary Mnuchin announced the initial budget of $350B for the Small Business Paycheck Protection Program is exhausted.  While Congress debates if and how to replenish the budget, it makes sense to take a quick look at where the money went and assess which states were winners and losers in the great pandemic disbursement.

The publicly available data[1] remains fairly high-level, but by combining basic small business data from the Census and the Bureau of Labor Statistics and a clever index, it’s pretty straightforward to characterize where the dollars landed.  There is not enough information to discern if the monies were intentionally directed, but there is enough to call for significant follow-up analysis when the data does become available.  Federal dollar disbursements have, for better or worse, political implications and it’s best to understand them before disbursing more.

Here’s the money shot:

Here’s how I got there.

First, the high-level view.

$342 billion was provided to nearly 1.7 million small businesses in all 50 states plus the District of Columbia and five territories.  Approximately 27% of the nearly 6 million US small businesses with 1 to 500 employees received monies.  Anecdotally there is significant demand from the remaining small businesses to participate.  

Now, where’d the money go?

The state-by-state data reveal significant disbursement ranges across three key metrics.  

First, what percentage of small businesses in a state actually got a loan?  While 58% of North Dakota’s small businesses received support, only 15% of those in California did the same with a national average of 27%.   I call this the Participation Rate.  

Second, how many dollars landed in each state relative to the number of small businesses in that state?  This is a “per capita” metric which accounts for the variety of small business distributions across states.  Again, the metric varied widely, with Hawaii ranked highest at $83k per business and Florida lowest at almost $40k against a national average of $56k.  

Third, how many dollars landed in each state relative to the number of employees in a state’s small business sector?  This is another per capita metric, and perhaps the most important given the program’s intent to support PAYROLL checks across small businesses. This metric also displays a broad range, from Nevada’s low of $4k per employee to North Dakota’s high of nearly $8k against a national average of $5.6k.  

So when I stack rank each of those three metrics, do a simple addition of each state’s rank on each metric and total them up, I see North Dakota on top and Nevada on the bottom.  Put all that on a map and you see it above.

Now any map published today quickly gets politicized and compared to the 2016 Presidential Election Results map.  That is not my intent here.  I’m really looking for systemic bias in a complex program that ramped up very quickly.  

Having said that, there are three important political questions to answer in this hyper-political environment.

Did Trump states fare better than Clinton states?  Yes.  States that voted for Trump in the 2016 election received 15% more loan dollars per small business than Clinton states, $60k vs $52k per business.  And Trump states received 8% more dollars per small business employee than Clinton states received.  

Did “swing states” receive more than solidly blue or red states.  Yes they did — 5% more as measured in either dollars per small business or dollars per employee.

Did states with Republican governors fare better than states with Democratic governors?  Yes.  Republican governors received 11% more per small business, and 9% more per small business employee than their Democratic colleagues.

Does all this mean the $350 billion was disbursed with political motivation and conspiracy?  No, the data do not support such a claim.  Still, disbursement of federal dollars absolutely has political impact and the extent to which it favors certain geographies over others cannot be ignored.  I have no evidence to suggest a political conspiracy directed to this result, but a proper post-program analysis I believe is warranted as these distributions don’t seem “random”.  In fact, Congress should review these results immediately so any next funding round may adjust for any systemic bias.  To that end, here’s the questions I’d ask…

  1. Is Congress satisfied with the relative disbursement of these funds?  Does the wide range across these metrics make sense?
    I think not.  If the goal is to stabilize paychecks for small business employees, it seems to me that the per capita by employee distribution should not range from $4k to $8k.  I’d target no more than a 25% discrepancy for this metric.  To get there we need more data about the number of employees of those companies that did receive funds versus those that did not.  
    Similarly, Participation Rate ranged from 15% to 58% of a state’s small businesses received a loan.  That metric should be within a 10 point margin.

  2. 4,664 banks participated in the application and disbursement process of the Paycheck Protection Program.  That’s a lot of banks to ramp up in mere weeks to a brand new program.  It’s time to assess before doubling down.  To what degree does the banks’ own geographic distribution and physical ability to process the loans impact the resulting distribution?  What new coverage should be put in place to improve the distribution?  And to be clear, we need to choose banks not in an effort to be fair to banks, but in an effort to serve the program goals best … ensure small business employee paychecks can continue during the health crisis.

The program was necessarily and understandably rolled out quickly and without full awareness, with an ability to learn adapt along the way.  We’re on the path to doubling the funding next week.  Let’s do so with reference to the core goals in a measurable way.

Data Appendix

SBA Paycheck Protection Program Report
as of April 16, 2020
Plus Data from US Census and Bureau of Labor Statistics 

Total # Loans1,661,367
Total Dollars $     342,277,999,103 
Average Loan Amount $   206,022 
Loan $s per All Small Businesses in US $     56,452 
Loan $s per SmallBiz Employee $       5,652 
%age of All SmallBiz Receiving Loans27%

This table requires wider-than-a-phone screen to read comfortably.

Geo# of Approved LoansApproved Dollars Avg Loan Amount%age of Business Receiving LoanLoan Dollars per  Small BusinessLoan Dollars per SmallBiz EmployeeCumulative State Rank
AK4,842$921,927,504 $190,402 29% $ 55,868  $   6,716 23
AL27,922$4,862,690,120 $174,153 39% $ 67,797  $   6,056 16
AR21,754$2,722,726,557 $125,160 44% $ 55,465  $   5,549 30
AZ19,280$4,846,959,062 $251,398 18% $ 45,511  $   4,548 47
CA112,967$33,413,693,192 $295,783 15% $ 44,113  $   4,625 49
CO41,635$7,392,960,359 $177,566 31% $ 54,245  $   6,481 31
CT18,435$4,151,934,451 $225,220 27% $ 60,240  $   5,572 36
DE5,171$1,090,415,848 $210,871 27% $ 57,267  $   5,824 33
FL88,997$17,863,199,837 $200,717 20% $ 39,838  $   5,112 44
GA48,332$9,464,475,442 $195,822 27% $ 53,656  $   5,641 38
HI11,553$2,046,450,982 $177,136 47% $ 83,311  $   7,417 2
IA29,424$4,315,688,444 $146,672 48% $ 70,477  $   6,642 5
ID13,627$1,850,034,026 $135,762 35% $ 48,113  $   5,687 32
IL69,893$15,972,578,071 $228,529 28% $ 63,467  $   6,448 25
IN35,990$7,491,445,351 $208,154 34% $ 70,412  $   6,077 15
KS26,245$4,288,652,108 $163,408 47% $ 77,020  $   7,087 4
KY23,797$4,149,467,684 $174,369 37% $ 64,067  $   5,824 22
LA26,635$5,100,534,501 $191,497 34% $ 64,447  $   5,635 26
MA46,937$10,360,907,178 $220,741 33% $ 73,627  $   6,871 11
MD26,068$6,537,733,687 $250,795 24% $ 61,092  $   5,658 34
ME14,993$1,944,425,549 $129,689 45% $ 58,822  $   6,617 13
MI43,438$10,381,310,070 $238,991 25% $ 60,804  $   5,486 37
MN46,383$9,014,060,040 $194,340 40% $ 77,381  $   7,160 6
MO46,481$7,547,822,023 $162,385 41% $ 67,221  $   6,486 12
MS20,748$2,481,000,606 $119,578 49% $ 58,136  $   5,674 21
MT13,456$1,470,300,136 $109,267 42% $ 46,092  $   5,983 28
NC39,520$8,005,752,270 $202,575 23% $ 46,019  $   4,679 42
ND11,002$1,548,384,035 $140,737 58% $ 81,990  $   7,928 1
NE23,477$2,988,890,489 $127,311 56% $ 70,946  $   7,244 3
NH11,582$2,006,858,477 $173,274 39% $ 68,140  $   6,676 10
NJ33,519$9,527,794,260 $284,251 18% $ 49,808  $   5,189 41
NM8,277$1,424,408,711 $172,092 25% $ 43,289  $   4,193 46
NV8,674$2,013,939,889 $232,181 17% $ 40,018  $   4,003 50
NY81,075$20,345,681,101 $250,949 18% $ 44,154  $   4,950 45
OH59,800$14,108,889,927 $235,935 33% $ 78,495  $   6,471 14
OK35,557$4,615,708,450 $129,812 50% $ 65,320  $   6,499 8
OR18,732$3,806,104,476 $203,187 20% $ 41,062  $   4,369 48
PA69,567$15,697,648,689 $225,648 31% $ 69,535  $   6,247 19
RI7,732$1,335,777,801 $172,760 33% $ 57,873  $   5,828 29
SC22,933$3,807,578,397 $166,031 29% $ 47,369  $   4,660 40
SD11,324$1,369,616,339 $120,948 53% $ 63,768  $   6,541 9
TN34,035$6,542,045,089 $192,215 35% $ 68,115  $   5,857 17
TX134,737$28,483,710,273 $211,402 31% $ 65,248  $   5,973 24
UT21,257$3,695,399,459 $173,844 33% $ 57,319  $   6,259 27
VA40,371$8,721,170,223 $216,026 27% $ 58,227  $   5,598 35
VT6,983$1,000,127,478 $143,223 40% $ 57,965  $   6,357 18
WA30,421$6,959,680,159 $228,779 20% $ 45,641  $   4,957 43
WI43,395$8,317,705,842 $191,674 41% $ 78,277  $   6,564 7
WV7,861$1,351,223,328 $171,889 31% $ 53,122  $   5,008 39
WY7,618$837,018,372 $109,874 44% $ 48,293  $   6,494 20
DC & Terr6,915$2,083,492,741 $251,683 N/AN/AN/AN/A
US1,661,367342,277,999,103 $206,022 27% $ 56,452  $   5,652  

[1] Small Business Administration, Paycheck Protection Program Report through April 16th referenced in SBA Press Release Number 20-33.