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The federal government’s small business rescue program, facing a public outcry after it handed out millions of dollars in aid to publicly traded companies, seemed to direct the majority of loans at smaller businesses in the second wave of funding.
The average loan size was $79,000 as of Friday, according to new Small Business Administration data released this week. So far, the agency has distributed more than 2.2 million loans worth close to $175.7 billion, or a little over half of the $310 billion in funding allotted by Congress. That’s in addition to the $349 billion loaned out in just 13 days during the program’s first round of funding.
Still, since the Paycheck Protection Program relaunched last week, the SBA has approved 7,582 loans worth more than $2 million, which accounts for just 0.35 percent of total loans — but around 16 percent of the total pool of money.
In the first round of funding, loans of more than $2 million account for about 1.5 percent of total loans, but around one-fourth of the total pool of money. At the end of the first round, the average loan size was $206,000.
Facing mounting backlash after major restaurant chains and billion-dollar companies secured loans, lawmakers in creating the second round of funding tried to limit which businesses could tap the coronavirus aid. They set aside $30 billion for lending institutions with less than $10 billion in assets and established an eight-hour period in which only small lenders could access the system.
Small lenders tended to grant smaller loans, according to the data. The average PPP loan at banks with less than $1 billion in assets was about $58,000. Banks with more than $50 billion in assets on average approved a loan worth a little over $90,000.
Overall, though, big banks dominated the lending in the second round. Banks with more than $10 billion in assets processed 68 percent of the PPP loans last week, compared with about 40 percent during the program’s first round.
The loans, which are forgivable if at least 75 percent of the money goes toward maintaining payroll, will face increased scrutiny if they’re worth more than $2 million, Treasury Secretary Steven Mnuchin told FOX Business last week. The federal government will perform a full audit on companies that receive a loan above $2 million to ensure they meet the necessary certifications.
"Before we forgive these loans, we’ll check every single one over $2 million," Mnuchin said. "So anybody that took the money that shouldn’t have taken the money, one it won't be forgiven, and two, they may be subject to criminal liability, which is a big deal."