Op-Ed: Despite the rocky publicity, the small-business loan program is really working

This article originally appeared on the Washington Post on April 30, 2020.

Media coverage of the federal government’s efforts to help small businesses has focused lately on big companies’ grabbing loans that were meant to help smaller ones weather the novel coronavirus economic shutdown. But the numbers from the Cares Act’s Paycheck Protection Program are coming in, and they’re impressive.

On April 3, the Small Business Administration launched the PPP with $349 billion. The SBA’s most recent report says that through April 16, the agency approved nearly 1.7 million loans through 4,975 lenders, depleting the entire fund. According to SBA Administrator Jovita Carranza, the agency “processed more than 14 years’ worth of loans in less than 14 days.” By any measure, that’s lightning speed. And now a new tranche of money is in the pipeline.

It turns out that just 1.6 percent of total PPP loans were for $2 million or more, coming to a total of about $95 billion, according to the SBA — some of those loans presumably going to large firms that weren’t the legislation’s intended beneficiaries. Treasury Secretary Steven Mnuchin has announced that the government will perform a full audit of any company with a loan of $2 million or more, and companies that took loans they didn’t need could be “subject to criminal liability.” A number of companies have already repaid their loans.

For the most part, these PPP loans appear to be actually reaching the small businesses as intended. Loans for less than $150,000 account for 74 percent of total loans — and 96 percent were for less than $1 million. The average loan was $206,000.

But is the money helping? As the former chief executive of CKE Restaurants, with about 200 franchisees, and a former director of the International Franchise Association, I’ve been hearing from a lot of nervous small-business owners since the beginning of the economic shutdown.

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