Larger small businesses are more likely to receive a COVID relief loan compared to smaller businesses according to a survey by Bench.co. More than 60% of the businesses with annual expenses exceeding $500,000 have received either a Paycheck Protection Program (PPP) or an Economic Injury Disaster Loans (EIDL) loan. This is compared to smaller businesses with $50,000 or less in annual expenses accounting for 20% of those who got a PPP or an EIDL loan.
So far though the PPP loan is advertised as forgivable, but only 6% of small businesses who were lucky enough to get the loans have had their loans forgiven so far. This number is likely to increase as the end of the 10-month deferred payment period comes to an end.
PPP Loans Not Getting to Smallest Businesses
Of the 10,000 small businesses surveyed only 27% had received PPP loans with a majority either being ineligible or barred from the COVID relief. The survey found 17% of those who had received a PPP loan, 10% received the EIDL and a further 10% received both relief loans.
Other findings of the survey include:
- Out of the 6% who had received loan forgiveness two-thirds (72%) received forgiveness on the entire PPP loan.
- Less than a fifth (16%) of those that had applied received forgiveness on less than 90% of their PPP loan.
- E-commerce, software, and web content businesses that were the least affected by the pandemic represent 70% of businesses that received no funding at all.
- Businesses such as bars, restaurants, gyms, and fitness centers received 50% of some form of COVID relief.
- Payroll-intensive businesses in hard-hit industries received the largest PPP loans relative to their annual expenses. Businesses in arts and entertainment received the largest PPP loan amounts of around 12.5% of their annual expense levels. While restaurants and bars saw PPP loan amounts of almost 10% of their annual expenses.
Why are Smaller-sized Businesses Receiving less COVID relief?
According to Bench the reason smaller businesses received or are receiving less financial relief could be because they had low to no payroll costs- as per PPP eligibility requirements. This would also mean that smaller-sized businesses would be eligible for small loan amounts. Furthermore, larger-sized businesses have relatively larger resources to dedicate to understanding the PPP and submitting an application compared to a one-person operation.
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Thanks for sharing Samson.
I’m not surprised that this PPP loan isn’t getting to enough smaller businesses.
Smaller businesses are always left out from the scheme of things most times.
The only option small businesses have is to ensure that they incorporate technology to their business. That way, they can be able to reach more.
Keep it up with this great work you are doing.
Lisa A Debord
I totally agree . I only received first ppp draw signed for second draw through Womply and Benworth and sat in Lender Submitting 6 weeks and then went to ppp ended. Yes I was very upset because I’m in health care field and had cleliential tell me they where scared for anyone to come in their home. So there was a big loss.
Bit unfair they should give loans to the smaller business owners as well.