Did Manufacturing Businesses Receive Their Fair Share of PPP Loans?


Note to reader: Over the next several weeks, Heartland Forward will be analyzing the types of businesses and races of business owners that received Paycheck Protection Program (PPP) loans through June 30, 2020.

You can preview the visualizations referenced below here:

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Because the working conditions in many manufacturing facilities require workers to be in close proximity to one another, businesses in the manufacturing industry were among those adversely impacted by social distancing restrictions. With the notable exception of specific subsectors that were declared to be “essential critical infrastructure workers1” (such as food processing and medical equipment fabricators), many manufacturing facilities were closed during the economic shutdown to prevent the spread of COVID-19.

Manufacturers are important components of local economies. They often provide above-average wages, which allow employees’ households to consume more goods and services from other businesses, often locally owned, in their communities. They also purchase inputs from other regional manufacturers and depend upon mining, wholesale, transportation and distribution firms. As a result, manufacturing firms often have high multiplier values, which reflect these linkages to other firms across the region.

Exploring the share of loans by industry, one quickly observes that the manufacturing industry is dominated by employer firms, since manufacturing represents more than seven percent of all employer firms but only three and one-half percent of all firms in the Heartland.2 This is also intuitive, since most forms of manufacturing require more than one employee to run efficiently.

The number of businesses in these industries vary in each state, so we compare the share of PPP loans to businesses in manufacturing to the share of all employer firms in these industries (probably the closest number to the population of businesses applying for PPP), as well as the share of all firms in these industries (an estimate of the total population of businesses).

The first two columns in each chart represent the benchmark values: share of employer firms and share of all firms (which includes non-employer firms such as sole proprietors, contract works and other self-employed individuals), respectively. The third column presents the share of loans going to manufacturing businesses. If this right-most column is higher than those to the left, then this indicates that the industry group received a greater share of loans than one would expect based on the group’s share of firms. If the share of loans is more than 10% less than the share of all employer firms, we conclude that the businesses in the sector did not receive a “fair share” of loans.

Several observations:

• Manufacturing businesses represent 5.3 percent of all employer firms and received 5.2 percent of PPP loans across the Heartland region

• Wisconsin has the highest concentrations of manufacturing firms relative to all employer firms (7.5 percent) and relative to all firms (3.5 percent)

• Manufacturing businesses comprise 7.3 percent of all loans in Ohio, the highest concentration in the Heartland

• North Dakota has the lowest concentrations of manufacturing firms and loans to manufacturing firms in the Heartland; manufacturing firms comprise 2.9 percent of all firms, 3.1 percent of all employer firms, and 2.9 percent of all loans.

• Seven states (Illinois, Louisiana, Michigan, Missouri, Ohio, Oklahoma and Texas) received a greater share of PPP loans in manufacturing than the industry represented in all employer firms

• In another seven states (Arkansas, Indiana, Kansas, Kentucky, Minnesota, North Dakota and Wisconsin), manufacturers received a share of PPP loans below, but still within 10 percent of, their share of all employer firms.

• Manufacturers in the remaining six states (Alabama, Iowa, Mississippi, Nebraska, South Dakota and Tennessee) received a share of PPP loans more than 10 percent less than their share of all employer firms.

Payroll Protection Program (PPP) represents a unique stimulus program designed to encourage businesses to maintain payroll levels despite pandemic-related interruptions by authorizing local financial institutions to extend potentially forgivable loans at favorable terms. The program provided one-percent loans to qualifying businesses, though the loan would be forgiven if certain requirements were met by the business.3

While designed for expediency, the PPP sought to leverage existing financial institutions to distribute the loans rather than create tedious qualification rules and bureaucracy, which would have required both time and resources. However, expediency is not without cost – specifically, leveraging existing financial institutions may limit access to the PPP for small and non-employer business owners.

So, what does all this mean? Whether manufacturing businesses received their fair share of PPP loans largely depends on which state in the Heartland the businesses were located. Regardless, preserving manufacturing jobs during these unprecedented times is paramount to ensuring that local economies in general persist. Manufacturing jobs employ local workers, and these wages in turn support the retail and service businesses that provide for the household needs of workers. Manufacturers also depend on other businesses to purchase inputs and distribute their products around the world. Because of these linkages across the economy, manufacturers represent important components of economies.

Congress and the Trump administration need to reach an agreement on extending economic and financial aid to those firms and individuals most impacted by COVID-19. Another round of PPP loans should be a major piece of the legislation as manufacturers are the backbone of many economies which sustain retail and personal services businesses as well as various industries in their supply chains. The Heartland cannot afford to lose as single job that could be created by manufacturing businesses.

Below is the schedule of posts in this series:

• Week 1: Black and Hispanic Business Owners

• Week 2: American Indian, Pacific Islander and Asian Owned Businesses

• Week 3: Loan Recipients by Gender

• Week 4: Accommodations and Food Services & Arts, Entertainment, Recreation Businesses

• Week 5: Manufacturing

• Week 6: Retail & Other Services

Data Notes

Data on Payroll Protection Program3 loans are from the U.S. Treasury. These are loan-level data based on individual loan applications. We aggregated loan-level data to the state level in order to capture the state-level distribution of loans across industries.

Data on industry of employer firms are from the U.S. Census Bureau’s 2017 Annual Business Survey.

Data on owners of all firms (both employers and non-employers) are from the U.S. Census Bureau’s 2012 Survey of Business Owners. Use of these data are necessary due to the lack of publicly available information on non-employer firms from the 2017 Annual Business Survey.


  1. Critical manufacturing sectors, as defined by the Cybersecurity and Infrastructure Security Agency of the U.S. Department of Homeland Security, include:
  • Workers necessary for the manufacturing of metals (including steel and aluminum), industrial minerals, semiconductors, materials and products needed for medical supply chains and for supply chains associated with transportation, aerospace, energy, communications, information technology, food and agriculture, chemical manufacturing, nuclear facilities, wood products, commodities used as fuel for power generation facilities, the operation of dams, water and wastewater treatment, processing and reprocessing of solid waste, emergency services, and the defense industrial base. Additionally, workers needed to maintain the continuity of these manufacturing functions and associated supply chains, and workers necessary to maintain a manufacturing operation in warm standby.
  • Workers necessary for the manufacturing of materials and products needed to manufacture medical equipment and PPE.
  • Workers necessary for mining and production of critical minerals, materials and associated essential supply chains, and workers engaged in the manufacture and maintenance of equipment and other infrastructure necessary for mining production and distribution.
  • Workers who produce or manufacture parts or equipment that supports continued operations for any essential services and increase in remote workforce, including computing and communication devices, semiconductors, and equipment such as security tools for Security Operations Centers (SOCs) or data centers.
  • Workers manufacturing or providing parts and equipment that enable the maintenance and continued operation of essential businesses and facilities.

Taken from: https://www.cisa.gov/sites/default/files/publications/Version_3.0_CISA_Guidance_on_Essential_Critical_Infrastructure_Workers_1.pdf

  1. The Heartland region consists of these states: Alabama, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas and Wisconsin.
  2. Complete details about the SBA’s Payroll Protection Program, including qualifying businesses and loan forgiveness criteria, can be found here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program