The Paycheque Protection Program has helped tens of thousands of businesses large and small in Arizona more easily weather the economic downturn caused by the COVID-19 pandemic. The program, overseen by the federal Small Business Administration and administered by the banks, was part of the $ 2 trillion CARES relief bill approved by Congress at the end of March.
In Arizona, 19,270 loans were made in April and May. These loans ranged from less than $ 150,000 to $ 10 million. The most common loan amount in Arizona was less than $ 150,000, of which 7,944 were granted in Arizona, according to the SBA. Of the 11,326 remaining loans in the state, the most common size was between $ 150,000 and $ 350,000.
“I viewed P3s as the way the government chose to pull out as much money as possible as quickly as possible,” said Dennis Hoffman, director of the L. William Seidman Research Institute at the WP Carey School of Business in Arizona State University.
“There were very few rules and [regulations] on who could apply other than the size of the company. Big boys were supposed to understand this in a different way. “
But there were about 1,300 loans over $ 1 million. A lot of people have said that this defeats the purpose of the program, which was to help small businesses.
“It’s not illegal or unethical, or anything like that. It was just the way the program was put together,” Hoffman said. “
In Arizona, 58 of the loans were between $ 5 million and $ 10 million. Almost half of these loans, the largest, went to the healthcare and hospitality sectors.
The federal government has provided information on companies that have received loans over $ 150,000. According to the data, the construction industry in Arizona received the most loans. This was also true in Pima County.
In Cochise County, the health care sector received the most loans. The 17 loans made to this industry covered a financial range of $ 150,000 to $ 5 million and included hospitals and doctors’ offices.
In Santa Cruz County, wholesale trade has been the main beneficiary of PPP loans. This industry includes those that process fresh produce, much of which crosses the border at Nogales. These loans ranged from $ 150,000 to $ 1 million.
One of the first complaints about the PPP program was that small businesses couldn’t access money because they needed to have a relationship with a bank and the big national banks had the most money. to lend.
“If you were a little guy who had a relationship with a relatively small bank in Arizona, you should have had as easy access as any other bank,” Hoffman said.
In Arizona, the major banks have granted the greatest number of loans. Familiar names like JP Morgan Chase, Bank of America, Wells Fargo, BBVA and other big banks have made about a quarter of the loans.
“A lot of small businesses don’t or always have needed an ongoing relationship with banks from a lending standpoint, say, and it’s just taken a while to develop,” Hoffman explained.
In Pima County, a dozen credit unions provided loans and a half-dozen private finance companies provided loans. Most of them only granted one loan.
When the federal government released the data, the largest loans included business addresses. Upon reviewing the information, it emerged that in some cases multiple loans were issued to the same address, sometimes totaling millions of dollars.
In Pima County, 31 addresses received 79 loans. Some of these addresses had up to six loans. A search of public records showed that most of these loans were made on behalf of an individual branch of a parent company. For example, a Tucson-based auto repair company has taken out loans for each of its divisions in multiple states.
There were no instances of multiple loans at a single address in Cochise or Santa Cruz counties.
The SBA will forgive low-interest PPP loans as long as the company can demonstrate that at least 60% of the money has gone to payroll.
Congress is still wondering if a similar program will be included in the next coronavirus relief program.