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Small business: Paving the road to recovery

A look at the Paycheck Protection Program, the critical support it’s providing to businesses and how it’s helping restore the economy

America relies on the small business that line the streets in all of its communities. More than 99% of the businesses in the United States employ fewer than 500 people, and historically, these small firms have created two-thirds of America’s net new jobs.footnote1 For these businesses and the communities they call home, navigating the impacts of the coronavirus is not only critical to their future, it’s paramount to the nation’s recovery. The federal Coronavirus Aid, Relief, and Economic Support (CARES) Act, adopted in March, included the Paycheck Protection Program (PPP) for exactly this reason, providing up to $659 billion in loans to small businesses so they could continue to pay their employees and certain operating expenses.

As part of its efforts to help small businesses during this time, Bank of America was the first to accept PPP applications and as of May 15 has received approval from the Small Business Administration (SBA) for 322,000 loans to small business clients for more than $26 billion in relief. So far, 98% of the applications are for companies with fewer than 100 employees and 81% are for companies with 10 or fewer employees. Nearly a quarter of the applications were from companies from low-to-moderate income neighborhoods.

“The payments are going exactly where they were supposed to go: to very small businesses in big numbers across the country,” says Brian Moynihan, the Chief Executive Officer of Bank of America.footnote2 The average loan size so far is $80,000.

Brian Moynihan

To meet the high demand of loan applications, Bank of America mobilized thousands of employees in round-the-clock shifts. “We know that behind each application is a business owner seeking financial relief,” says Dean Athanasia, President of Consumer and Small Business, Bank of America. “We feel a deep sense of responsibility to assist small businesses of all sizes secure vital funding.”

And while no fees related to the PPP have been received from the SBA, Bank of America announced that net proceeds related to PPP fees will be dedicated to support small businesses and the communities and nonprofits we serve.

How the funding has helped

Because of these loans, many businesses that have served their communities for decades have been able to keep their employees on the payroll – or bring them back if they’d been furloughed. One large medical group in Florida, for example, was able to keep paychecks flowing without interruption to its staff of more than 100 employees, while a 51-year-old New England HVAC engineering firm rehired its furloughed workers the very next day after their loan came through.

For many small business owners, their businesses are as much emotional investments as financial ones. The second-generation owner of a family-run furniture store on the West Coast, for example, reported that her PPP loan means that she can continue to honor her father by keeping the lights on, while at the same time saving the company for her own daughter.

Bank of America is also deploying its capital to assist local communities and small businesses by committing $250 million in capital and $10 million in direct philanthropic grants to community development financial institutions (CDFIs). These small, local financial institutions have a mission of serving low- and moderate-income communities, expanding access to capital for small businesses impacted by the coronavirus.

In addition, Bank of America is working to address the critical needs in communities, including access to food, medical supplies and services, and more.

Read more about the bank’s $100 million philanthropic commitment, in addition to the $250 million it gives each year, to non-profits on the front lines helping those affected by the coronavirus.

How we're helping small businesses remain vital
Exhibit Item 1 of 4
$26 billion+

In loans processed by Bank of America for more than 322,000 small firms

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of those loans are for companies with fewer than 100 employees

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are for firms with 10 or fewer employees

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are for companies in low-to-moderate income communities

Originally published 6/22/2020