Manufacturers across the middle of the United States received their “fair share” of Paycheck Protection Program (PPP) loans, but the companies had varying shares of PPP loans based on their location, according to a new study.
Bentonville think-and-do tank Heartland Forward released Wednesday (Sept. 9) an analysis of PPP loan distribution for the manufacturing sector that shows manufacturers in states such as Mississippi received a lower share of PPP loans in comparison to their share of all companies. The study focused on companies in the Heartland, comprising 20 states in the middle of the country: Alabama, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas and Wisconsin.
Manufacturers in Ohio had the highest participation rate in PPP among Heartland states and comprised 7.3% of all loans in the state. Those in about a third of the states, including Illinois, Louisiana, Michigan, Missouri, Ohio and Oklahoma, received a greater share of PPP loans than they represented among companies. Of the remaining 13 states, the manufacturers’ share of PPP loans in seven states, including Arkansas, Indiana, Kansas, Kentucky, Minnesota, North Dakota and Wisconsin, were within 10% of their share of all employer firms.
Manufacturing is one of the most affected industries amid the COVID-19 pandemic because many manufacturing facilities require workers to be near one another, a challenge in maintaining physical (social) distancing guidelines. Some subsectors were considered essential critical infrastructure workers, including food producers and medical equipment fabricators, but many manufacturing facilities were closed during the economic shutdown to slow the spread of the virus.
Manufacturers comprise more than 7% of all employer firms and 3.5% of all firms in the Heartland states. In its analysis, Heartland Forward compared the share of PPP loans to businesses in manufacturing to the share of all employer firms in these industries (likely the closest number to the population of businesses applying for PPP) and the share of all firms in these industries (an estimate of the total population of businesses). If the share of loans is more than 10% less than the share of all employer firms, businesses in the sector didn’t receive a “fair share” of the loans, according to the analysis.
Following are several observations in the analysis:
- Manufacturing companies represent 5.3% of all employer firms and received 5.2% of PPP loans across Heartland states
- Wisconsin had the highest concentration of manufacturing companies relative to all employer firms (7.5%) and relative to all firms (3.5%)
- North Dakota has the lowest concentrations of manufacturing firms and loans to the companies in the Heartland states; manufacturing firms comprise 2.9% of all firms, 3.1% of all employer firms and 2.9% of all loans
- Manufacturers in Alabama, Iowa, Mississippi, Nebraska, South Dakota and Tennessee received a share of PPP loans more than 10% less than their share of all employer firms.
Over the next several weeks, Heartland Forward will release analysis on the types of businesses and races of business owners that received PPP loans through June 30. Next week, the organization will analyze PPP loans provided to businesses in the retail industry.
Link here to see the complete analysis.