On July 6th, the Small Business Administration and Department of Treasury released a trove of data on the Paycheck Protection Program (PPP), a subsidy program aimed at providing relief to small businesses amid the ongoing economic downturn caused by the COVID-19 pandemic. The data provide detailed information on how PPP funding has been distributed over the past three months. PPP loan recipients are split into two categories: (1) small-loan borrowers of less than $150,000 and (2) large-loan borrowers of $150,000 or more. For small loans, the data provide the exact loan amount, whereas large loans are classified as being in one of five loan-value bins: (1) $150,000 – $350,000, (2) $350,000 – $1 mil., (3) $1 mil – $2 mil, (4) $2 mil. – $5 mil., and (5) $5 mil. – $10 mil. An additional distinction is that the business names of the large-loan recipients are explicitly identified in the database, whereas those of small-loan recipients are not. For both small and large borrowers, the data also provide the 6-digit NAICS code associated with the loan recipient’s industry, voluntary demographic information, and information on where the loans were obtained.
This blog post takes a cursory look at what the data indicate about PPP uptake in Montana’s agricultural sector. After removing 317 loan observations with missing NAICS codes or codes that did not match any listed in the official NAICS code list, 22,785 individual PPP loan observations remain throughout Montana. To narrow things down to farm-related businesses, I selected NAICS codes that have a clear relationship with agriculture. This leaves out many small businesses that undoubtedly have an important indirect effect on the sector, such as agricultural credit lenders and retail outlets that buy directly from farmers. However, firms that specialize in these activities as they relate to the farm sector do not have their own distinct NAICS industry codes. For the NAICS classifications I did select, I list the NAICS code with the highest level of aggregation that maintains specificity to the agricultural sector. For instance, NAICS code “111” can be further broken down into the production of specific types of crop commodities.
In terms of PPP uptake in Montana’s farm sector, the following table breaks down loan volume by farm-related industrial classification. Overall, the data reveal 1,664 PPP loans with direct ties to the agricultural sector, representing roughly 7 percent of all loans granted to Montanan businesses. Of these, most loans (84 percent) were tied to businesses engaged in animal or crop production. As would be expected, the lion’s share of animal production loans (94 percent) went to firms specializing in cattle ranching and farming and most crop production loans (57 percent) went to wheat producers. The data also show some diversity in the types of farm operations receiving PPP loans. For example, five orchard producers and two aquaculture businesses have participated in the program. Apart from agricultural businesses directly engaged in production, the majority of the other farm-related loans went to entities engaged in various activities that support the sector, such farm-product wholesalers and input suppliers.
The figure below shows the distribution of loan value, broken down across agricultural and non-agricultural business entities. Generally speaking, the value of agricultural loans is lower than those going to non-agricultural businesses. Over 70 percent of the agricultural loans were for less than $25,000, compared to just over 50 percent of non-agricultural loans. For loans less than $150,000, the median (or “middle”) agricultural loan value is $12,900, which is below the median non-agricultural loan value of $19,535. At the other end of the spectrum, a nontrivial number (10 percent) of non-farm loans were for greater than $150,000 compared to under 3 percent of agricultural loans.
All told, the newly released data indicate participation in the PPP by a diverse array of small businesses in Montana, both within and outside the farm sector. Although farm-related PPP loans in Montana make up a small share of overall program uptake in the state, it bears mentioning that a primary goal of the PPP is to maintain employment rolls for small businesses affected by the ongoing pandemic. For many farm businesses, retaining employees may not be a relevant goal, and there are other pandemic-inspired programs, such as the Coronavirus Food Assistance Program, tailored more explicitly to aid the agricultural sector.
Finally, I’ll note that the data published to date may not present a comprehensive picture of eventual PPP uptake in Montana. Of the $660 billion allocated to the PPP to date, roughly $130 billion remains unclaimed. The program was set to expire on June 30th, before a buzzer-beating extension was agreed upon in the Senate. PPP extension legislation was then passed in the House of Representatives the following day before being signed into law by President Donald Trump on July 4th. Under the new program guidelines, small business owners now have until August 8th to apply for a PPP loan.