
Where $521B in U.S. Small-Business Aid Went - pseudolus
https://www.bloomberg.com/graphics/2020-ppp-loans-data-disclosure/
======
PragmaticPulp
I’ve been working with several contractors lately. They’ve all been bragging
about getting Coronavirus small business loans they don’t need, as demand for
home renovation contractors is way up while everyone is working from home. One
of them asked me if I had any ideas for investing the loan somewhere that
would earn him extra money.

Meanwhile, we’re starting to see a steady stream of questionable loans granted
to large businesses such as Kanye West’s or Mitch McConnell’s wife.

I’m sure these loans were helpful to some people somewhere (food service
industry is a good example) but the overall execution and monitoring have been
generally quite poor.

~~~
cameldrv
As someone who could have collected quite a bit of money from this program but
didn't need it, this really ticks me off. You're not supposed to apply for the
loan/grant unless you are expecting to lay people off.

~~~
supercollision
FWIW thanks for being responsible.

I'm just a W2 worker but have seen plenty of rationalization around this
including "well my competitors are taking the forgivable loans so unless I do
I'm at a disadvantage and thus negatively impacted" or "I can't plan 100% for
the future and that worries me, so therefore I'm impacted." And that's just
the small fishes; a sibling comment mentions our leaders promised to cooperate
with oversight then immediately about-faced. No consequences anymore. I know
they're supposed to be used for wages but I've seen someone take it anyway as
a non-qualifying business because they expect the requirement to follow up
with documentation will go out the window since it'll be too much work (to be
fair, this last thing was one isolated case).

I think it's unfortunate how much grifting and opportunism goes on, and as we
get closer to the election or need to prop up more businesses with more aid,
we'll have further programs and rounds with avenues for abuse.

------
zaroth
Just to throw another anecdote into the pile, a SaaS company I co-founded
about a decade ago has about 50 customers with an average ARR per customer of
$20k, billed/paid quarterly, with the average customer on a 2 year contract.
So each month they typically are billing ~12 customers, who will write a check
within 30 days. Receivables 30 days past due are essentially $0 going back for
years. Each quarter typically there are 6 contracts up for renewal.

As of March 1 they had maybe $20k of accounts receivable and had renewed 4
contracts YTD, and signed 4 new ones. _Not a single customer_ paid in March.
90% of customers did not pay in April. By May 1 they were looking at about
$160k in accounts receivable, and had not closed or renewed a single deal in
the last two months. Business had essentially flatlined.

Of course they didn't turn anyone off, because the marginal cost of keeping a
customer live is basically zero, and these weren't businesses that were
bankrupt, just everyone managing the heck out of their cashflow.

Fast forward to today and 80% of those customers have paid or at least started
paying. They closed their first new contract since February two weeks ago, and
have made a couple renewals.

Without PPP the company would probably not exist today. I think they got just
under $100k in funds. Management is paid almost entirely through
distributions, of which there will be none this year. Overall rough guess is
that they'll have gone from a +30% trajectory to -30% YoY for 2020.

~~~
jkob_
Non-american here, so the goverment loan is supposed to cover all the missing
payments, and then when the customers repay the missing payments the business
pays the goverment back?

Also, it's super weird how Americans still use checks, especially to pay a
SaaS company. Invoicing is so much easier to work with.

~~~
Armisael16
“Write a check” is almost certainly just a figure of speech here.

------
eric_b
A lot of people on social media and in the news are complaining about
businesses that took the money that didn't "need" it. It's fun to be outraged
but I think there's a few things everyone should know:

\- First, the forgiveness requirements, while not fully finalized, cap the
amount of money a single employee can be paid and have forgiven at ~20k. It's
not like people are getting 1M dollar loans they can just pocket individually.
There are reporting/documentation requirements in terms of employees on
payroll before and after the loan was made, and documentation required to show
a history of the salary that you're asking to be forgiven. I'm sure some
things will slip through the cracks, but really they did a pretty good job of
shoring up loopholes in the short time period they had to devise this thing.

\- Second, very high salaries are not 100% forgivable. If you're making 200k,
the most you can have forgiven from the PPP loan is the equivalent of a 100k
salary during the 8 or 20 week forgiveness period (again, capped at 20k max)

\- Third, who's to say what the long term effects of the coronavirus are on
the economy? Just because a business doesn't need the money at this moment
doesn't mean they won't be wishing they took it six months from now. Should
people who got the stimulus checks and didn't need them give them back too? I
don't see too many people complaining about that! I still believe we haven't
yet seen the true shape of the coming recession, and think there will be much
small business pain ahead. Better to have given these businesses a hand now, I
think.

\- Fourth - you have to use the money more or less on payroll. This was
actually a huge sticking point for a lot of restaurants that wanted to use the
money on rent. It's not like loan recipients can buy company Ferrari's with
the money - it mostly has to be given to employees in the form of payroll.

Overall the PPP was not perfect, but as far as quickly created government
programs, I don't think it was that bad. Millions of small businesses got
money, the vast majority of whom can actually use it to pay their middle class
employees.

If we want to complain about government programs that are enriching the upper
class - I think the latest Fed moves are a better place to start.

~~~
JamesBarney
Say I'm a company and I have 100k in the bank. I take the loan for 100k and
the company I own makes 100k and it pays out 100k in salary.

Now I have 200k in the bank where otherwise I would have had 100k. In a sense
isn't this going into the owners pocket?

~~~
adventured
I think you're forgetting that this is a loan first, one that you're
inherently liable for paying back, until you're qualified for loan forgiveness
afterward.

You have to apply for the loan from a lender (typically a major bank, they
handled a large percentage of PPP loans), that will approve your loan or not.
The process of that - properly - requires providing financial information
about your business and its condition.

If you lie about anything during the before screening or after (when seeking
forgiveness), you've committed bank fraud.

If you didn't end up needing the loan, you're liable for paying it back. The
lender will make a determination on your forgiveness based on the financials
you have to present to attempt to qualify.

There's a giant paper trail for all of this related to your taxes (IRS),
financial statements, bank accounts and employee salaries.

Again keep in mind this is a loan. You apply for loan forgiveness after the
fact and must substantiate that forgiveness; you may or may not be granted
that forgiveness.

You will need to be ready to present full financial statements for the year.
The fraud will leap right off the page in your scenario (pocketing an amount
equal to the total payroll and then seeking forgiveness).

Here are some of the key conditions for the PPP money:

\- You have to substantiate your need for the loan. Then if you apply for loan
forgiveness you have to demonstrate that you qualify for loan forgiveness,
that you meet the requirements. The lender makes a determination on your loan
forgiveness.

\- It's based on your average monthly payroll cost for 2019. You can receive
up to 2.5 times that amount, meant to cover roughly 8-10 weeks.

\- It can go to payroll. 60% must go to this. You may not include contractors
in this figure. You must maintain 75% of the prior salary levels.

\- The remainder can go to a select few things including rent, mortgage
interest, utilities.

\- It's limited to a 24 week span of time, in which the forgiveness applies.

~~~
JamesBarney
> If you didn't end up needing the loan, you're liable for paying it back.

I don't believe there is a necessity requirement on the forgiveness, only on
the original funding. And the government assumes any company that received
less than 2 million in funding meets this requirement.

(from the treasury FAQ) Question: How will SBA review borrowers’ required
good-faith certification concerning the necessity of their loan request?
Answer: When submitting a PPP application, all borrowers must certify in good
faith that “[c]urrent economic uncertainty makes this loan request necessary
to support the ongoing operations of the Applicant.” SBA, in consultation with
the Department of the Treasury, has determined that the following safe harbor
will apply to SBA’s review of PPP loans with respect to this issue: Any
borrower that, together with its affiliates,20 received PPP loans with an
original principal amount of less than $2 million will be deemed to have made
the required certification concerning the necessity of the loan request in
good faith.

------
edoceo
Anecdata: I'm a small business, 5 regular employees in a few states. Got PPP
via WF (in the second wave, WF was very laggy). It did help us but we didn't
need the money when we got it - we'll need it a few weeks - because impact to
us will lag behind things at the front of the supply chain.

I did lose one employee who quit voluntarily to build his own thing (something
I'd been pushing him to do anyway) and he's actually growing that new action.

I'm little mad a WF for taking so long to land the cash tho.

------
sinab
I made all of the data available and made some example Google Colab notebooks.
Feel free to contribute with a PR

[https://github.com/sbooeshaghi/SBA-PPP-Loan-
Data](https://github.com/sbooeshaghi/SBA-PPP-Loan-Data)

~~~
etaioinshrdlu
This seems like an excellent fit for BigQuery... The dataset can be shared
publicly in BigQuery as well.

~~~
osipov
BigQuery is a big overkill for a dataset that fits in memory. Colab + Pandas
is the way to go unless you want to sit around twiddling thumbs while BigQuery
shuffles the data around.

~~~
etaioinshrdlu
It's definitely overkill, but it does run fast on small datasets. (almost any
query would return in a few seconds at this size)

Also, I find it's SQL dialect and UI very nice for simple stuff too.

------
danans
It would appear the South had a very high rate of small businesses receiving
the loans versus other areas. This is fascinating given that the South was the
last area to lock down and the first to open up. Can anyone posit a reason for
the clearly higher rates? Are there higher rates of self-employment there?

~~~
avs733
Republican leadership

(honestly not being sarcastic...that seems to be an active and intentional
goal of this administration)

~~~
danans
While it's a good angle for some investigative journalism, I'm not ready to
reach that conclusion unless some evidence emerges that shows that the loan
approval process was politically slanted.

What's even more striking in the statistics is that the loan granting rate in
the south is significantly lower in many cases than the percentage of small
business jobs saved. this seems to especially be the case in the poorest
states in the South.

~~~
avs733
There is a long pattern of behavior, which to me is evidence. Reported in
places such as:

[https://www.washingtonpost.com/politics/this-is-hardball-
tru...](https://www.washingtonpost.com/politics/this-is-hardball-trump-and-
republicans-bolster-red-states-punish-
blue/2017/09/25/e114cea4-9ef5-11e7-8ea1-ed975285475e_story.html)

[https://www.theatlantic.com/politics/archive/2020/05/trump-e...](https://www.theatlantic.com/politics/archive/2020/05/trump-
escalating-his-war-blue-america/611653/)

[https://www.cnbc.com/2020/05/05/coronavirus-trump-says-
blue-...](https://www.cnbc.com/2020/05/05/coronavirus-trump-says-blue-state-
bailouts-unfair-to-republicans.html)

[https://www.theatlantic.com/politics/archive/2019/09/trump-e...](https://www.theatlantic.com/politics/archive/2019/09/trump-
epa-california-car-emissions/598381/)

I believe there was even a Harvard public policy journal article that made
this argument which I can't locate at the moment.

~~~
danans
In general, I agree that the administration's policies have targeted blue
states for punishment, the biggest example being the tax cut. But in the
specific instance of the PPP loans, I'm just going to wait for the
investigative reporting.

That said the POTUS quotes in the CNBC article you linked regarding funding
for coronavirus relief are pretty interesting in retrospect:

“because all the states that need help — they’re run by Democrats in every
case.”

“Florida is doing phenomenal, Texas is doing phenomenal, the Midwest is, you
know, fantastic — very little debt,”

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xoxoy
I saw Mixpanel, Getaround, Bird, a16z, Index ventures, foundational Capital
all listed. The VCs are claiming they didn’t receive money on twitter...some
think it’s one of their portfolio cos but very strange nonetheless

------
atian
Really don't think too much about it. It's just our implementation of a
Keynesian stimulus.

It's almost too simple, but we're dealing with fire here and it's too
dangerous to do anything less spectacular.

~~~
fearoffish
I read that as Kanyesian.

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thraveboy
I really don't believe the high percentage rates and how they are computed.

Having lots of percentages over 100% is just bad data science and analysis.

Look at the state views.

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purple_ferret
Just another massive wealth transfer

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TuringNYC
Given that this is a public dataset, has anyone seen a good visualization not
behind a paywall?

~~~
dmitriy_ko
[https://www.bloomberg.com./graphics/2020-ppp-loans-data-
disc...](https://www.bloomberg.com./graphics/2020-ppp-loans-data-disclosure/)

