Of Small Business, Big Bucks, and PPP in South Carolina

Jul 7, 2020

PPP money saved more tan a few wallets from completely emptying out. How many is up for debate.
Credit Scott Morgan / South Carolina Public Radio

South Carolina small businesses received $1.87 billion through the federal Paycheck Protection Program, or PPP, and were able to revive 280,000 jobs by accessing the loans, according to newly released data from the U.S. Small Business Association.

The SBA’s public database identifies businesses that received $150,000 or less in PPP loans. The money went to 55,554 businesses in the state.

Corporations, along with LLC/LLP businesses and Sub S corporations (corporations with fewer than 100 shareholders that are taxes as partnerships), make up most of the businesses that got a payment – just short of 46,600 companies. These entities combined received $1.58 billion.

Some Quick Data:

The SBA database breaks down owner characteristics that include race, gender, and veteran status. The overwhelming bulk of companies in all three categories are not identified by those characteristics, but of those that are:

  • 3,663 businesses identified as White-owned, while 944 identified as one of four ethnicities: Native, Black, Asian, or Hispanic. Among businesses that identified by race of owner, White-owned businesses received $156,331,160; Minority-owned businesses received $31,666,945.

Among identified companies, there are roughly four times more White-owned businesses than Minority-owned, and White-owned businesses received about five times as much PPP money.

  • 6,984 businesses identified as male-owned, while 2,070 identified as female-owned. Among businesses that identified by gender of owner, male-owned businesses received $292,644,976; female-owned businesses received $71,063,756.

Among identified companies, there are roughly three times more male-owned businesses than female-owned, and male-owned businesses received about four times as much PPP money.

  • 5,437 businesses identified as non-veteran-owned, while 407 identified as veteran-owned. Among businesses that identified by veteran status, non-veteran-owned businesses received $18,998,015; veteran-owned businesses received $227,710,664.

Among identified companies, there are roughly 13.5 times more businesses owned by non-veterans, yet veteran-owned businesses received about 12 times as much PPP money.

Some Quick Context:

But what do these numbers mean? It would be easy to jump to conclusions based on data points like these – for example, that White-owned businesses got disproportionately more PPP money than, say Asian-owned businesses.

But there are two problems with that logic. One is that only about 3,700 businesses identified by race, out of a pool of more than 55,000. The second is that it assumes all businesses are equal.  Many Minority-owned business are small from the start (more on this below) and, therefore, have smaller payrolls.

Ted Pitts, president and CEO of the South Carolina Chamber of Commerce, says that he suspects the overall percentages of markers like race or gender are generally representative when extrapolated statewide (kind of like how an election poll is usually correct in its proportions and percentages when take from a small sample). But he also reminds that PPP disbursement is based on payroll size and on the amount requested by businesses themselves.

“If you look at the size of payroll,” Pitt said, “the question would be, ‘Is the payroll that comes out of those companies [commensurate] with what they actually got?’ That’ll easily be found out on the back end because these are loans.”

In other words, there is simply not enough data to make such assumptions of fairness or unfairness. But there is enough understood about the characteristics of some business owners in general.

Small Businesses and Banks

A lot of small businesses started by women or minorities start very small.

“In a lot of instances, they start with … their life savings,” Pitt says. “They invest in that business as opposed to going to a bank to borrow money to start with.”

Why that’s a big deal is because a relationship with a bank proved to be a key determinant in who got PPP money first.

“Have a good strong relationship with a bank. Or two,” Pitt says.

PPP loans are credited by SBA with having restarted 280,000 jobs in South Carolina. The real number of jobs saved because PPP happened is impossible to quantify based on the data released, but Pitt says it’s probably much higher, given that he’s talked with so many business owners who said they were able to preempt furloughs and layoffs because they were able to tap into PPP.

“We can be certain that PPP saved jobs,” he said. “How many jobs it saved is up for discussion.”

And typically, those were business owners who had strong relationships with their banks, and whom banks had all the pertinent information on that allowed them to process PPP applications most expediently.

Keep in mind, banks were inundated with PPP applications. Pitt says that bankers worked feverishly to process the applications as fast as they could, and where there were applicants with deeper histories and paper trails, applications could just move more swiftly through the process.

Pitt said he’s heard a lot of people blaming banks for being slow to process PPP applications, but he cautions against thinking the worst of financial institutions.

“It wasn’t because the bank was ignoring [some applicants],” he said. “It was because the bank needed some more information that they didn’t have, but [that] they had from a hundred other customers.”

Looking Ahead

Pitt says the best approach for small businesses, beyond building a good relationship with “a banker who knows your name,” is to have a contingency plan.

“I would venture to say that those small businesses that didn’t have reserves or contingency plans are probably the ones that we’ve lost,” he said.

But there’s also the need for people in the community to shop small and local, if the oft-vaunted “backbone of the economy” is to survive..

“We need to shop at small businesses,” Pitt said. “We need to support our local small businesses and help them get back on their feet now … because they truly are our community.”

Scott Morgan is the Upstate Multimedia Reporter for South Carolina Public Radio. Follow Scott on Twitter @ByScottMorgan.