Delaware continues to see smallest PPP 2.0 lending

Delaware continues to see the least in PPP lending according to data from the SBA.  | CREATIVE COMMONS

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

WILMINGTON – With only a month remaining for lending in the U.S. Small Business Administration’s Paycheck Protection Program (PPP), the First State’s borrowing from the program continues to be smaller than its population ranking.

As of Feb. 28, Delaware ranked last overall in total PPP 2.0 loans obtained and second to last in aggregate dollars allocated in all 50 states, according to SBA data. Borrowers have obtained 4,816 loans worth a total of more than $453.1 million, finishing only ahead of Vermont’s aggregate value haul as the two have traded last place in the metric.

Despite having nearly 40% more residents than the least populous state Wyoming, Delaware has obtained nearly 50% fewer loans. The First State has closed the gap on its smaller peer in terms of total value, now sitting only about $12 million behind after previously being more than $50 million behind.

On a per capita basis, Wyoming has received about $804 per resident while Delaware has received $465 through the program’s latest round. The First State also now ranks farther behind Washington, D.C., which has nearly 300,000 fewer residents, in both loans and value though.

After President Joe Biden limited PPP lending to businesses with fewer than 20 employees or sole proprietors from Feb. 24 to March 9, it’s unlikely that his home state’s rankings will improve substantially in the next weekly program report. Delaware saw little activity through a similarly focused initiative at the start of PPP 2.0 lending, which gave underserved communities an eight-day head start to apply for loans.

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.

The First State 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.

Originally instituted under the CARES Act passed by federal lawmakers in March 2020, the PPP 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 the end of March. So far, about 55% of the funds have been allocated, but lending has slowed of late.

The third round of lending has been most popular with those seeking a second PPP loan, with about 70% 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 $28 billion – the most of any industry sector.