Report: Nonprofits Obtained 3.7% of PPP Loans

A new report from the Johnson Center for Philanthropy at Grand Valley State University shows that about 40% of nonprofits eligible for Paycheck Protection Program (PPP) loans have benefited.

Jeff Williams, director of the Community Data and Research Lab (CDRL) at the Dorothy A. Johnson Center for Philanthropy at GVSU, on July 21 published a report which provides new data analysis on the impact of PPP on nonprofits and nonprofit employment nationwide in the first round.

The PPP second-round application period was scheduled to end on August 8, with approximately $ 138 billion in funds remaining under the program established by the Coronavirus Aid, Relief and Economic Security Act (CARES).

The U.S. Department of the Treasury and the U.S. Small Business Administration released extensive paycheck protection program loan data in July.

Williams notes in the report that up to $ 669 billion has been made available in the form of loans for entities with 500 or fewer employees or meeting other limited special criteria. Loan amounts were capped at 2.5 times the organization’s monthly salary costs, with a maximum loan of $ 10 million.

The data files for the first round of funding were released in two sets:

Loans of $ 150,000 and more: A single file contained a list of the 661,218 organizations that received loans at this level. Although the organizations were identified individually, the loan amounts they received were presented in wide ranges.

Loans less than $ 150,000: A batch of 57 separate files, one for each state and territory, lists the 4.22 million organizations that received loans of less than $ 150,000. Organizations on this list have not been identified individually – only general characteristics such as city, state, zip code, and industry code – but individual loan values ​​have been specified.

Williams noted that many news organizations and nonprofit advocates quickly reported and analyzed the largest loans (those over $ 150,000), including a Business Journal. item July 8.

But researchers at the Johnson Center were curious about the P3 lending universe as a whole. So the center combined the nearly 4.9 million loan records released by the SBA to determine how nonprofits were doing under PPP and how the PPP impacted the business. nonprofit employment during this historic crisis.

Williams said the impetus for compiling the report was due to the fact that nonprofits were not initially included in eligibility for PPP loans; it was only after the publication of a final rule that they were added. He speculated that this could have had a negative impact on the number of requests.

“We were a little concerned that the nonprofits didn’t get the message and maybe didn’t know they were eligible because the focus was on small businesses. Additionally, we were concerned because so many nonprofits are part of the social safety net and community protections around the state, that if nonprofits start having problems exactly when we have a high unemployment rate, which is not a good thing for the state and it could hurt communities, ”said Williams.

“We were curious to see – did nonprofits apply? Did they apply in the number we expected? And were they successful in getting loans? “

The findings included the following:

  • Nationally, nonprofits received 3.7% of all loans made under the program.
  • Nonprofits received a greater share of high value loans (over $ 150,000) than any other type of entity.
  • The 181,680 PPP loans to nonprofit organizations protected 4.1 million nonprofit jobs.

“National numbers are clearly helpful,” said Williams. “But a better measure of the effect of PPP loans on the sector would be to examine how many nonprofits eligible to receive PPP funds were successful in their applications – and how many eligible nonprofits have been protected. “

Researchers in Williams’ team used the 2017 IRS 990 and 990-EZ (the most recent dataset available) to determine how many nonprofits were eligible to benefit from the program and found 452 000 organizations nationwide. Applying this estimate, the researchers found:

  • About 40% of qualifying nonprofits received a PPP loan, but this national average masks large variations by state. In Michigan, the figure was 41%.
  • Almost two-thirds of eligible nonprofit jobs were protected by PPP loans. In Michigan, 55% of eligible nonprofit jobs were protected.

Williams noted that there is an embarrassing discrepancy in the SBA data. It shows that, in all industries, 51.1 million jobs have been protected by the PPP. Since nonprofits make up around 10% of the workforce, he said he would have expected at least 5.1 million jobs to be retained by PPP applicants. nonprofit – a 20% increase from the 4.1 million jobs the Johnson Center found protected.

The report, to bit.ly/nonprofitPPPreport, explores what happened to the cause of this discrepancy and additional data results – including an overview of the states where nonprofits are most and least successful in their applications, and how PPP lenders, on average, have included nonprofit organizations in their loan portfolios.

Williams also provided the Business Journal with data specific to western Michigan for the counties of Kent, Ottawa, Muskegon and Allegan (see graph).

He conceded that there were enough gaps in the SBA data to prevent a full understanding of the result.

“Not as many nonprofits have received loans as in the economy. What we don’t know, unfortunately, is whether it’s because nonprofits actually had more money in the bank than small businesses; (if) banks were biased against nonprofits, which means that a bank understands a for-profit business better than a social service nonprofit and does not view the latter as a valuable customer ; (or if nonprofits) had a hard time applying. We just don’t know.

The biggest surprise of the Johnson Center’s findings, Williams said, was the fact that nonprofits were more successful at securing larger loans than any other organization. His hunch is that this is because larger, more established national nonprofits with strong balance sheets “that sort of look like a business” have been successful in applying for and getting loans.

“Probably the reverse of this means that community-based nonprofits – think of a nonprofit with four to eight employees and 30 volunteers – these are the types of organizations that we believe can see in the data, probably didn’t apply in the first place, ”Williams said.

He added that all indications are that small nonprofits are at least as at risk as small businesses of collapsing over the next 12 months. Current estimates are that around 20% to 25% of small businesses will fail within a year due to the impacts of COVID-19.

Williams said he hopes the report will raise awareness of the issues faced by nonprofits – both on the side of financial institutions and the nonprofits themselves – and that more organizations come forward. second round and with any other future funding possibilities.

FACT SHEET

West Michigan Data on P3 Nonprofit Loans

  • $ 187 million (estimated *) in 851 separate P3 loans to nonprofits in Allegan, Kent, Muskegon and Ottawa counties (hereafter, “the region”)
    • 208 loans, valued at $ 157.6 million, over $ 150,000 each
    • 643 loans, valued at $ 29.3 million, less than $ 150,000 each
  • 14,354 declared non-profit jobs retained in the region
    • 10,131 jobs in Kent County
    • 1,954 jobs in Ottawa County
    • 1,810 jobs in Muskegon County
    • 459 jobs in Allegan County
  • Top 10 lenders to nonprofits by loan value (estimated *), in descending order
    1. Macatawa Bank
    2. Michigan Merchant Bank
    3. Huntington Bank
    4. TCF Bank
    5. PNC Bank
    6. West Michigan Community Bank
    7. Fifth Third Bank
    8. Bank of community shores
    9. Bank of America
    10. Independent bank
  • Top 10 lenders to nonprofits, by total number of loans, in descending order
    1. Macatawa Bank
    2. TCF Bank
    3. Huntington Bank
    4. Michigan Merchant Bank
    5. Fifth Third Bank
    6. PNC Bank
    7. Lake Michigan Credit Union
    8. West Michigan Community Bank
    9. Independent bank
    10. ChoiceOne Bank

* The above loan values ​​are estimated because the SBA and Treasury have only published loan ranges (no actual value) for all loans over $ 150,000. To see the endnotes in report for the Johnson Center explanation of its estimation method and accuracy.

Source: Jeff Williams, Dorothy A. Johnson Philanthropy Center

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