FRANKFORT, Ky. (WTVQ) – Nearly $8 billion in federal Paycheck Protection Program (PPP) loans originated in Kentucky to help businesses across the state survive the pandemic, according to information provided to a legislative panel Tuesday.
“As you can see, the financial services industry was really integral in administering this program and getting this relief to companies,” said Charles Vice, commissioner of the state Department of Financial Institutions. He was testifying before the first meeting of the Interim Joint Committee on Banking and Insurance this year.
Vice said 50,655 PPP loans were issued during the first round of the program, ending in August of last year. The average loan that round was for $104,278. Vice said another 31,647 loans were issued during the second round, ending on May 31. The average loan for the final round was for $78,359.
Rep. Rachel Roberts, D-Newport, asked why the average amount of a loan in the second round was lower. Vice said the second round focused on small businesses.
“More loans were going out in smaller dollar amounts to smaller businesses,” he said. “That’s one of the big differences between the average loan size between the first draw and second draw. There was a purposeful, concerted effort to try to engage smaller businesses with PPP loans.”
Christy Carpenter, president-elect of the Bluegrass Community Bankers Association, attributed the smaller amounts to the fact that the self-employed and farmers more easily qualified for the second round of PPP loans. “That’s what we saw at my community bank,” she told the committee.
In other pandemic-related questions, Rep. Shawn McPherson, R-Scottsville, asked if there had been an increase in Kentucky landlords defaulting on mortgages because of eviction moratoriums.
“One of the things I have been very … surprised with is that the past-due rates and the loss rates of our institutions have been relatively low to this point,” Vice said. “As of right now, we have not seen a significant increase in either past dues, foreclosures or defaults.” He added that could change as loan deferment programs implemented during the pandemic expire.
Vice said COVID-19 created other market concerns.
“Uncertainty in markets caused some to move to non-traditional investments with increased risk of fraud,” Vice said. He explained that social media posts were being used to promote agenda-based trading, possibly to manipulate markets and encourage pump-and-dump schemes.
Rep. Tom Smith, R-Corbin, asked about the possibility of regulating cryptocurrencies that have also seen an increase in popularity due to uncertainty in traditional markets.
“One of the challenges there is taking the right approach to this,” Vice said. “We are looking at it. We are engaging some companies with this. We are talking to other states about this. And we are taking a look at the best way for Kentucky to move forward.”