Delaware falls to last place in PPP 2.0 lending

Delaware ranked last in approved PPP 2.0 loans and loan value, according to data released by the SBA on Monday. | CREATIVE COMMONS

WILMINGTON – More than two weeks into the latest round of lending in the U.S. Small Business Administration’s Paycheck Protection Program, the First State ranks last.

As of Feb. 7, Delaware ranked last overall in total PPP loans obtained and aggregate dollars allocated in all 50 states, according to SBA data. Borrowers have obtained 2,787 loans worth a total of more than $287.8 million, but the slow start in Delaware comes as about a third of all the money allocated by Congress for the round has been claimed.

Through the first full week of lending in the so-called PPP 2.0, Delaware ranked last in total loans but ahead of Vermont in aggregate value. Not anymore as the Green Mountain State has pulled in more than $303 million through the second week, according to the SBA.

Despite having nearly 40% more residents than the least populous state Wyoming, Delaware has obtained 80% fewer loans and more than $70 million less than its smaller peer. The First State barely ranks ahead of Washington, D.C., which has nearly 300,000 fewer residents in terms of total loans, and far behind the district in value as D.C. has seen more than $369 million loaned.

It’s a familiar position for the First State, which started among the bottom of the program’s first round of lending in April 2020. By the end of the second round of funding in August, however, Delaware had risen a few places in both rankings to finish closer to its 46th population ranking.

A new round of PPP lending began Jan. 11, starting with a targeted opening to lenders that serve underserved communities, and opened more broadly Jan. 19. The PPP was the federal program most acutely tailored to the economic recovery of businesses impacted by the effects of the COVID-19 pandemic, offering low-interest loans that could be entirely forgiven under certain terms.

Originally instituted under the CARES Act passed by federal lawmakers in March 2020, it doled out $525 billion of the $659 billion appropriated by Congress before the program expired in August. Delaware businesses received more than 13,000 of those loans worth more than $1.5 billion.

Under the second stimulus package approved by Congress and President Donald Trump in December, the PPP was restarted with $284 billion to allocate through March 2021, including at least $15 billion targeted at those underserved communities.

When the loan portal reopened on Jan. 11, it initially accepted first-time PPP loan applications from participating community financial institutions (CFIs), but it appears the interest was lukewarm. SBA data shows about only 5% of loans processed came from a CFI, and they accounted for about $4.5 billion of the $100.5 billion allocated. In Delaware, the only participating CFI was Wilmington-based True Access Capital.

The third round of lending has been most popular with those seeking a second PPP loan, with about 72% of loans going to second-time borrowers nationwide. These loans are capped at $2 million rather than the prior $10 million, and only be eligible to businesses with 300 or fewer employees, versus 500 in the first rounds.

Borrowers need to prove at least a 25% reduction in gross receipts in a 2020 comparable quarter, which could be a reason for the declining interest in the loans. The terms of the loans in the third round are more favorable though, as the cover period can be set anywhere from eight to 24 weeks and cover additional costs, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures.

Hotel and restaurant operators are also now allowed to apply for up to 350% of monthly payroll versus the 250% allowed in the earlier round, to address the disproportionate impact they have shouldered this past year. That seems to be effective, as about 18% of loans went to those industries so far, totaling more than $18 billion.

The Biden administration inherited the PPP 2.0 a little more than a week after it began, and officials have been working to increase lending to minority business owners. Only about 11% of loans have gone to borrowers identifying in a minority group, according to SBA data.

“While we are excited that we are doing a better job of reaching the hardest hit industries and communities, we are committed to taking additional steps to ensure that there is equitable access for underserved businesses and that we are leading with empathy to support small businesses in a difficult spot,” SBA Senior Advisor to the Administrator Michael Roth said in a statement.