According to recent news items, Congress is opening up a new stimulus bill, which proposes another round of Paycheck Protection Program Loans (PPP). While we await the final legislation on that, the Small Business Administration recently released statistics on a subset of recipients of its $380 Billion Paycheck Protection Program Loan. For those unaware, the focus of the loan is to provide assistance to companies that were negatively impacted by the COVID-19 pandemic and subsequent business shutdowns.
The PPP Loan initiative ended on June 30, 2020 for new loans, over 4.5 Million loans have been processed, and of that number there were an estimated 650,000 loans issued that were over $150,000. The SBA has released data and statistics on the loans over $150,000 on their website. We took a look to see what companies within the Security and Patrol Service industry took PPP Loans, and the impact on the industry.
Security services represented a small subset of the total PPP loans given
Unsurprisingly, when you are focused on an entire U.S. economy, the subset of security is fairly small. In reviewing the data, of the 630,000 businesses that received PPP loans over $150,000, security services represented only 1207 businesses, with an estimated $900M to $1B in funding. Compared to the 630 businesses and the $380B, this is a very small subset.
However, it’s also important to realize that the majority of businesses in security in the U.S. are under 250 employees, and the top 30 security guard firms are not eligible for the PPP loans. The 1200 businesses that received PPP loans are mid-size guard firms, operating typically with about 50-250 employees.
Below is a breakdown of the loans provided to security firms:
The majority of these businesses received between $150,000-$350,000, and the bulk of the companies were all under $1M in funding. The PPP Loan is designed to provide paycheck protection for roughly two months of payroll for businesses, which gives an interesting insight into the industry revenue. As the majority of security businesses that are eligible are smaller to mid-sized, this gives a good snapshot of where the average payroll sits for the majority of security firms in the United States.
In an upcoming research project, we will be exploring more on how the small to mid-sized firms adapted and changed during the pandemic. You can participate here.
The majority of PPP loans came from five states
Another interesting point on these statistics is where the loans were issued. Nearly every state received these loans, but there were some outliers. Below is a breakdown of the top five states that led the number of loans provided (that were over $150,000):
In analyzing the data, the top five states mirror the top states in the country where guard firms tend to do more business more: 53 percent of the PPP loans came from these five states, and it provides a good indication of where the mid-sized businesses congregate in the U.S.
California was an overwhelming majority on the number of loans, most likely because of the combination of COVID-19 related impacts in California, as well as the concentration of security services. We will be exploring the impact of certain regions in our upcoming research project on the impact of 2020 on security operations.
In fact, the top states in the Security industry mirror that of the overall number of PPP loans, with California, New York, Florida, Texas and Illinois leading the number of total loans. Here’s the breakdown for all states:
Over 100,000 jobs were retained in security
The PPP loans primary goal was to keep jobs active by providing assistance during a difficult time. Security services, especially guard firms, are often considered an essential business and required to continue to work during shutdowns to maintain safety and security to other essential businesses. We’ve spoken about how some security firms have struggled while others have thrived - it all depended on what client type the firm contracted with. The ability to retain security officers during a downturn and not have to rehire, onboard and re-train represents a huge cost savings, and having the ability to keep officers paid is a big benefit.
In all, the security service sector that took loans over $150,000 were able to retain approximately 117,000 jobs during this pandemic/shutdown, and 62,000 of those jobs came out of the states that either had the largest concentration of security firms or were most impacted by the shutdown. Which states were those? You guessed it:
Where the PPP goes from here – Forgiveness, compliance and will it open up again?
While the current PPP loan is currently closed to new applicants, there are still many companies that have to use the funds and meet the requirements for forgiveness. The SBA recently changed the rules on the PPP with the PPP Flexibility Act. Essentially, it provides more time to apply for forgiveness, more time to use the loan and more flexibility on what you can use the loan for. There are many reports and proof points companies will need to apply for, and this also presents compliance challenges – whether you are in security or any other industry.
The largest looming question now becomes – what happens next? We are seeing more surges in other states. Where California and New York were the largest areas of concern, the rest of the country is starting to see spikes in cases. Will we see a resurgence in the Fall, as many have predicted? Will another PPP loan be required? It’s hard to tell definitively but the statistics provided by the SBA have given an interesting snapshot into where the money went, and more pointedly – where security services spent the money.
We will continue to monitor this, and this will be a focus area on our upcoming research project on Benchmarking Security in 2020. If you’d like a copy of that report, feel free to participate in the survey and you can receive a copy when it’s released.
