A new report by Biz2Credit reveals that among small businesses who took Paycheck Protection Program (PPP) loans those in finance and retail had done well in recovering from the effects of the pandemic.
According to Biz2Credit Recovery Ranking for 2021 report businesses engaged in finance, retail, and real estate lead businesses in recovery showing a recovery rate above the 50-percentile mark. These businesses experienced the greatest strength of recovery from COVID-19 lockdowns. Because businesses in financial services and insurance had a high demand for expansion capital, but a low level of distress. Even though these businesses are rebounding financially, challenges, however, remain related to the supply chain, rather than consumer demand.
Which Small Businesses Recovered Best After Getting a PPP Loan?
This ranking matrix measures the resiliency of businesses across different industries based on their ability to bounce back from the economic shock of the pandemic.
Other findings of the report include:
- In terms of recovery, wholesale trade (49%), manufacturing (48%), and construction (48%) are the top three.
- In terms of businesses which continue to require additional access to credit and are showing resilience include those in finance and insurance; retail; administrative and support, and waste management and remediation services.
- Industries that were relatively less impacted by the pandemic such as real estate, rental, and leasing are anticipating recovery with little demand for more credit.
- Businesses that are seeking higher credit access but indicate low recovery expectations include those in Information Technology (IT); professional and technical services; accommodation and food services; health care; wholesale trade, and manufacturing.
- Businesses that have been severely impacted by the pandemic and are experiencing a slow recovery, include transportation and warehousing; educational services; and arts, entertainment, and recreation.
More Targeted Support Needed for Recovery
Among the key findings of the report is recovery among small businesses has been uneven across industries. And it suggests targeted opportunities for additional private and public support for small businesses. In a bid to help small businesses recover from the pandemic the US government had rolled out relief programs. This includes the Small Business Administration’s Paycheck Protection Program (PPP) to millions of small businesses across the nation.
Businesses in accommodation and food services had seen the highest average approval rate for all financing applications at 57% followed by retail trade (55%) and health care (54%).
How are Businesses Faring?
Among businesses with the highest average revenue in 2020, information technology leads with average revenue of over $1.5 million. This is followed by wholesale trade ($1.3M), manufacturing ($1.1M), retail trade ($750K), accommodation and food services ($626K), and health care and social assistance ($612K).
In terms of businesses with the highest average credit score, Information Technology averaged a score of 636, followed by real estate (633), finance and insurance (624), professional and technical (623), and health care (619).
The report also analyzed how frequently businesses in different industries worked with a CPA firm for financing applications. Among the top business working with CPA firms are other services (20.8%), transportation and warehousing (12.8%), and professional services (11.3%).