RALEIGH, N.C. (WNCN) — Wilbur Bell asked for a $25,000 federal loan in April to keep his small tour bus company in Fayetteville on the road.
That Paycheck Protection Program loan finally came through on Aug. 8 — the last day — and it was for just $1,250.
“Which didn’t do anything for me,” Bell said, saying his company was “put to the bottom of the list.”
The federal government released more data earlier this month on the PPP loans designed to help small businesses keep paying their workers after widespread shutdowns caused by the COVID-19 pandemic.
A CBS17.com analysis of that data in North Carolina found that the largest eligible businesses receiving the largest loans generally were served first.
More than three quarters of the loans awarded in sums of at least $1 million to businesses across the state were handed out in the first two weeks of the program.
Michael Walden, a professor of economics at North Carolina State University, says that likely reflects the pre-existing relationships those larger firms had with the banks that issued those loans.
“These loans are made through banks, and it helped if you were a business, if you had a relationship with a bank, particularly a large bank,” Walden said. “And bigger businesses were more likely to have that relationship rather than a small business.”
CBS17.com previously reported that the top 1 percent of loans in North Carolina account for more than a quarter of all loan value, and that half the money went to just 4.5 percent of recipients.
According to federal data analyzed by CBS17.com, there were 1,706 loans issued in portions of $1 million or more. Of those, 76 percent — 1,311 of them — were approved between April 3-16.
Banks collected fees on a sliding scale that depended on the size of the loan, with lenders earning 5 percent on loans of $350,000 or less, and 1 percent for loans of $2 million or more.
According to those numbers, processing a loan of $350,000 would yield a bank $17,500 in fees while a loan of the maximum amount of $10 million would result in a fee of $100,000.
But Walden didn’t think that discrepancy was because the banks were focusing on helping big firms at the expense of smaller businesses.
“It was simply a matter of the way this was set up that the big businesses were served first,” Walden said.
Walden says Congress adjusted the program after the initial wave of applications to give smaller businesses more access to funding.
With lawmakers discussing the possibility of another round, Walden said he would recommend “all ranges of business are covered, and I think particularly maybe even set aside more money for small businesses, because small businesses are really getting hit.”