Campbell Pryde, President and CEO, XBRL US
The Paycheck Protection Program (PPP) was designed to provide desperately needed support for small businesses struggling to stay afloat during countrywide shutdowns due to COVID19. The program distributed $500 billion in loans to nearly 4.9 million businesses. The funding provided was critical. But has it been as effective as it could have been?
Given the sums involved and the importance of the program to our economy, it is incumbent upon our government to leverage every tool available to ensure success. Waste should not be allowed. Results should be easy to quantify and report.
The U.S. Small Business Administration (SBA) recently published data detailing results from the PPP*. Preliminary results suggest that while some goals have been at least partially met, many have not:
Goal: Get money into the hands of small businesses adversely affected by the nationwide shutdowns driven by COVID19.
Result: While 86.5% of loans were for less than $150,000, 34.8% of loans were for $1 million or higher. Over ⅓ of all PPP loans went to 1.7% of the total count of companies receiving loans.
Goal: Help small businesses in need retain employees.
Result: While the unemployment rate has declined to 11.1% from a high of 14.7% in April, an analysis** by the Peter G. Peterson Foundation indicates that the Accommodation and Food Service sector which had the biggest job losses in April at 30.8%, received only 8.1% of the PPP funds disbursed.
Goal: Improve the outlook for small business.
Result: Small businesses outlook about their own prospects has declined since the start of the pandemic despite the infusion of cash from the PPP. The U.S. Census surveyed+ small businesses on how much time they expected to pass before returning to normal operations. When first asked the question the week of April 26, 31.4% of respondents said it would be more than 6 months before they’d be back to normal operations. That figure increased to 43.9% during the week of June 21. Similarly, 6.1% said they would likely never return to normal operations when asked in April; when asked in June, that figure rose to 9.7%.
How we can do better
Regulators and Congress have the same goals. No one wants to waste money. Everyone wants the economy to get back on track. So why are these programs not as effective as they can, and should be?
Need for Data
The driver for any effective program that involves distributing and tracking funds, regardless of size, is data. Accurate, consistent, timely, machine-readable data. And when the scope of the program is as big as the PPP, it is even more critical. The PPP involves vast sums of money and the distribution of loans and grants to nearly 4.9 million organizations, through thousands of lenders. Only good quality data will give regulators and banks the tools to make sure that funds are going to the right businesses and to track performance.
Good data requires data standards
The only way to accurately and cost-effectively keep track of all the information that needs to be reported is by using data standards. A data standard is a technical language that consistently, unambiguously defines the data reported so that information about funds needed, employee count, company identifiers, and other information that is typically included in a loan application, can be automatically “read” directly from loan applications into government data collection systems. Making loan data machine-readable eliminates manual data entry and validation, which makes data higher quality, cheaper to process, and faster to analyze.
Standards will not only make it easier to gather and track information, but a standards program will dramatically reduce the cost of administering the program, and aid in identifying and reducing fraud and waste. Data standards will ensure that funds get into the right hands, and help programs like these do the work they were intended to do – support small businesses and the economy. Millions of companies, banks, and government agencies around the world already use data standards. Here in the United States, three regulators – the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the Federal Energy Regulatory Commission – effectively use standards to reduce their own costs and deliver better data to the public.
Other U.S. government agencies need to do the same.
Data standards are available, can be set up quickly, they’re open (free), and effective. We urge U.S. regulators to take the time to learn how data standards work and what they can do to reduce government spending and make important government programs better.
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