It’s rare to see how our government dollars are working in real time. However, the U.S. Treasury recently released data on loans granted by the recently-established Paycheck Protection Program (PPP), providing unique visibility into how a huge government economic intervention is playing out right now.
After many calls for transparency, the US Treasury released fairly detailed data on the 700,000+ businesses that received $150,000 or more in PPP loans (less detailed data was also released about smaller loan recipients). Large PPP loan recipient businesses account for less than 20% of all loans, but about 75% of allocated PPP loan dollars.
At Enigma, we were interested in learning more about who these 700,000+ businesses were and how they’re faring now. We ingested the PPP large loan recipient dataset and enriched it with our own data about small businesses. To see how many businesses had shut down for good, we joined PPP data with our new Business Closures dataset, a proprietary distress signal that tracks businesses’ operating statuses in near real-time. We did a quick analysis and here’s what we found:
Using our Business Closures data, Enigma calculates that nearly 3,000 businesses that took more than $150,000 in PPP loans have since closed. Fewer than 1% of all PPP large loan recipients across the U.S. are now marked as closed in Enigma’s data, with substantial variation from state to state. What remains to be seen is how many businesses stay in operation as the U.S. continues to grapple with COVID-19 and its economic effects.
The numbers look a bit more bleak when you consider the implications for jobs. The PPP dataset discloses how many jobs each recipient business hoped to retain, so we can calculate how many jobs were not retained by the 3,000+ now-closed businesses. In California alone, almost 20,000 jobs have been lost by closed PPP recipients, followed by 12,000 jobs lost in both Texas and New York respectively.
We can also examine how much money was loaned to now-closed businesses. Because loan amounts were disclosed only in ranges, we have a range in estimates for money distributed to closed businesses: a minimum of $1B and potentially as much as $2.6B. While this represents a small percentage of the hundreds of billions of dollars distributed in PPP loans, it is still a staggering amount. We’re curious to see how many large loan recipients continue to operate over the next few months, knowing that economic turmoil and contraction are predicted by many experts.
We refresh our business closures data bi-weekly, so we’ll update you from time to time on how the landscape of large PPP loan recipients changes. Will more businesses close? How many jobs will be impacted by those potential closures? And how many funds will ultimately go to now-closed businesses?
If you’re a financial institution that’s interested in our near real-time business closures data, we’d be happy to speak with you. If you’re a media organization that would like to learn more about this data, please get in touch.