When the Going Gets Tough, the Tough Get Lending

By Noah Yosif

Noah Yosif

What the Latest PPP Statistics Say About Community Banks’ Service to Small Businesses

The Small Business Administration's recent release of detailed Paycheck Protection Program (PPP) loan data provided the first real glimpse into the program’s success as a novel fiscal policy tool.

The PPP is designed to stem the economic devastation of the ongoing coronavirus pandemic by providing an essential influx of capital to Main Street communities via the small businesses that support them.

Here at ICBA, we knew community banks would play an outsized role in the success of this program. Well before coronavirus saturated our headlines, community banks accounted for 60 percent of small-business lending, served 58 percent of small businesses nationwide as their primary lender, and lent over $1.5 trillion to small businesses in 2019 alone.

So, while our feverish analysis has yet to yield any novel, Nobel Prize-worthy insights, it does affirm what we already knew: in times of crisis, small businesses have a friend in their local community bank.

Here are five key takeaways gleaned from the PPP data:

1) Community banks were the predominant PPP lender for small businesses.


Community banks made 2.8 million PPP loans. To put this into perspective, there were 4.9 million small businesses that received a PPP loan, which means community banks served 57.5 percent of all recipients.

Furthermore, there are 5.9 million employer small businesses eligible to receive PPP funds, which means community banks alone served 48.3 percent of eligible recipients. They also served 48.1 percent of small businesses nationwide when accounting for a mere 20,139 PPP-ineligible employer small businesses.

2) Community banks supported the majority of underrepresented small business owners.


Community banks accounted for 72.6 percent of all PPP loans made to small businesses owned by non-white minorities. Given their gargantuan geographic footprint, community banks served 83 percent of majority-minority counties while representing 100 percent of PPP lending within 161 of these localities nationwide.

Community banks also comprised 71.5 percent of all PPP loans to small businesses owned by women as well as 63.4 percent of all PPP loans to small businesses owned by veterans, amounting to almost 200,000 individual firms served.

3) Community banks saved jobs that mattered in critical areas of our economy.


Community banks saved 33.7 million jobs via the PPP, but just under 50 percent of these retentions came from four sectors: accommodation and food services, health care and social assistance, retail trade, and manufacturing.

These sectors have been disproportionately affected by the ongoing coronavirus pandemic and recession. Just this past month, their average unemployment rate was 13.7 compared to 10.9 percent in all other sectors. Together, they comprised over 42 percent of the total number of unemployed persons.

4) Community banks appreciated the urgency of processing incoming PPP loans.


States where community banks originated at least 80 percent of PPP loans also covered at least half of their first-quarter small-business payrolls five to 10 days faster than other states.

A quick turnaround in PPP applications was critical for many small businesses. Research has shown that the average small business has two weeks of operating capital reserved to weather a financial emergency.

This echoes the results of a similar study conducted by the Institute for Local Self Reliance, which found that states with more community banks per capita lent three times as many PPP loans.

5) Community banks provided PPP loans to communities of all kinds.


Community banks provided PPP services to 98.2 percent of counties designated as low-income or economically distressed by the Federal Financial Institutions Examination Council, constituting an average 85.1 percent of total loans provided to small businesses within these areas.

Furthermore, community banks provided PPP services to 96.6 percent of rural counties, providing an average 76.5 percent of small-business loans in these areas. They also performed well in urban counties, serving 92.4 percent of these localities while comprising an average 60.7 percent of total loans to their small businesses. 

Community banks have always maintained an outstanding record of service to the small businesses on Main Street nationwide. PPP merely provided another opportunity to demonstrate their capabilities and commitment.

They served nearly 50 percent of all small businesses, provided more than 60 percent of PPP loans to underrepresented small-business owners, saved more than 16.5 million jobs in sectors disproportionately affected by the coronavirus pandemic, decreased the time to cover small business payrolls by five to 10 days, and provided critical services to 96 percent of rural and 98 percent of low-income communities nationwide.

These statistics prove that even in an extraordinary economic environment, community banks are resilient, adaptable, and dedicated to serving their customers.  Amid a pandemic and recession replete with unknowns, we know community banks will always rise to the challenge, because, when the going gets tough, the tough get lending.

For additional information, check out our PPP lending dashboards to see what community banks did for your community.

Noah Yosif is ICBA assistant vice president of economic policy and research.