Jeffrey Gilbert, owner of a barbershop in Hartford’s West End, won approval Friday for a $10,000 forgivable federal loan through the Paycheck Protection Program, making him part of the last wave of participants in the popular coronavirus relief pipeline.
After a mad rush for the money in mid-April, when thousands of sole proprietorships and other small businesses — like the Professional Image Barber Shop that Gilbert opened almost 24 years ago — were left out in favor of larger firms, a second round of PPP funding appears to have satisfied demand.
The program winds down Tuesday. As of June 20, the Small Business Administration said, $128 billion was still waiting to be claimed. That’s why Connecticut and other states mounted a flurry of 11th-hour publicity in hopes of prodding business owners to apply through an SBA-approved lender.
But even without new participants like Gilbert in the final days, Connecticut has outpaced most other states in the gold rush, yielding, in my analysis, an extra $1.1 billion for the state.
As of June 20, a total of 58,257 Connecticut businesses had claimed $6.63 billion in loans — an average of $113,000 each — under revised rules so loose that most “borrowers” should treat the money as a grant.
Aside from that good result, the effort to stake claims to federal money, which started hurriedly in mid-March, delivered another payoff: better and more effective outreach to small business by the state Department of Economic and Community Development, and by assistance agencies such as the Connecticut Small Business Development Center, part of the University of Connecticut.
Many were unincorporated businesses owned by a single person, typically with few if any other employees.
“We worked with a lot of people in that category,” said Joe Ercolano, a Bridgeport resident who directs the Small Business Development Center. In the past, he said, “they might not automatically think about us.”
Broadly speaking, Ercolano said, “We’re learning a lot about how to reach people these days.”
His agency, with 28 employees, received $2 million from the federal stimulus, to hire additional business advisers among other improvements. Between March 18 and June 17, he said, the center helped 2,077 businesses, up from 798 in the same period in 2019.
That included Gilbert, the Hartford barber, who rents chairs to three other barbers at his shop. Gilbert told me other than HEDCO Inc., a Hartford lending and assistance agency, he wasn’t aware of economic development help out there until a customer told him about the Small Business Development Center.
“I feel like I’m part of it now,” he said. “I’m in the inner circle.”
That will happen in a federal gold rush of $750 billion — the combined total of the PPP and the earlier, smaller Economic Injury Disaster Loan program.
At the state DECD, email blasts delivered updates such as one from Commissioner David Lehman announcing the looser rules, letting businesses know there was still plenty of money available as demand for the loans had fallen.
DECD has a few of its own programs for business recovery, but Lehman said, “Our big philosophy on this was, the fed government had the bazooka, they can print money. ... That’s where the big money was.”
Those email blasts going out to 4,000 to 5,000 businesses went from a rate of 20 percent being opened, to well into the 30s — peaking at around 40 percent, spokesman Jim Watson said. That’s considered strong for an email newsletter.
So how well did Connecticut do? If we look at all 50 states, Connecticut came in No. 8 in PPP loan amounts per capita, at $1.86 billion for every 1 million residents. The national average was $1.56 billion per million residents — which adds up to that extra $1.1 billion in Connecticut.
Massachusetts and New York, by that measure, emerged as even bigger winners, with $2.04 billion and $1.94 billion in PPP loans, respectively, per 1 million residents.
Connecticut also outpaced the nation in the Economic Injury Disaster loans, collecting $1.4 billion, for a total of more than $8 billion in the two programs — money that will move into the state economy much more efficiently than, say, corporate or personal income tax breaks.
Connecticut’s extra $1.1 billion over the average in the PPP forms a nice bonus for a state that overall tends to fall short in many federal programs, and by some measures is the biggest per-capita net exporter of cash to the U.S. government — all the worse under the 2017 tax reform, which capped state and local tax deductions at $10,000.
Lehman estimates that 100,000 small businesses in Connecticut were eligible for the federal PPP. Many opted for unemployment benefits instead. He estimates that 80 percent to 90 percent of all employees at eligible businesses work for companies that received PPP aid.
It all started on a weekend in mid-March, when the state scrambled to gain disaster status under SBA (a different form of disaster status, unrelated to economic development, came later).
“Our businesses were a the front of the queue,” Lehman said, for the Economic Injury Disaster loans under SBA.
Connecticut also did well in the early round of the PPP, with 18,000 companies collecting $4.2 billion as of April 22, when the money dried up after a few days. That round went largely to firms with established banking relationships, many of them, such as FuelCell Energy of Danbury, larger than what you and I think of as a small business.
The average loan in that round was $225,000 in Connecticut. For the 40,000 businesses that won PPP aid since then, the average was about $60,000 per loan. Nationally, a similar pattern happened.
By May 16, in Connecticut and the nation, the vast majority of the PPP lending was done and it’s been just a trickle since then, surprising many who thought demand would continue.
Gilbert, the barber, received some unemployment benefits and tried to sign up for PPP aid starting in late May through his Connecticut-based bank, but had trouble with forms, then was offered just $1,000. He went through websites — Lendio and Kabbage — with better results.
He still hasn’t been able to reopen, he said, because he’s waiting for disposable capes to arrive.
Ultimately Connecticut’s success was mostly in the number of loans, not in the size of the loans, although the average loan was slightly higher than the national average.
“We’re really trying to help people in a crisis situation,” said Ercolano at the business development center, “and that’s what these small businesses are in, a crisis situation.”