The forest products industry’s use of Paycheck Protection Program loans

May 24, 2021
analytics forest industry forest products forestry jobs PPP loans

Summary

The Paycheck Protection Program (PPP) offered loans to businesses to provide a direct incentive for them to keep their workers on payroll. Forest products companies across the US received $4.7 billion in PPP loans offered through the Small Business Administration. Over 34,000 loans were offered to forest products companies in the US from April 2020 through May 2021, affecting 485,000 workers in the forest industry.

The Paycheck Protection Program

The US Small Business Administration (SBA) managed the Paycheck Protection Program (PPP) between April 2020 and May 2021. This loan program was created in response to business challenges presented by the COVID-19 pandemic.

The program provided loans to businesses to keep their workers on payroll, with many borrowers eligible for loan forgiveness. As of May 10, 2021, 49% of all PPP loans distributed in 2020 have been forgiven ($257.5 out of $521.2 billion).

In total, nearly 800 billion dollars were allocated to US companies as a part of the PPP. The loan program was initially slated to expire on May 31, 2021, however, funds for the program essentially ran out on May 2, 2021.

Approximately four percent of PPP loans were delivered to companies in the forestry and agricultural sector. This article summarizes information on PPP loans provided to businesses in the forest products industry.

PPP data

Data were acquired from the US SBA website (last updated 10 May 2021). To identify forest products companies, the North American Industry Classification System (NAICS) codes were obtained as a subset of the Agriculture, Forestry, Fishing and Hunting and Manufacturing industry titles. These represented 28 different industries including:

  • Forest nurseries and gathering of forest products,
  • Logging,
  • Converted paper product manufacturing,
  • Pulp, paper, and paperboard mills,
  • Veneer, plywood, and engineered wood product manufacturing,
  • Other wood product manufacturing, and
  • Support activities for forestry

PPP loans to the forest products industry

Forest products companies received 34,349 loans for a total of $4.7 billion through the PPP program from April 2020 to May 2021. The SBA provided PPP loans through three rounds between April 3, 2020 and April 16, 2020 (Round One), April 27 and August 8, 2020 (Round 2), and December 27, 2020 and May 5, 2021 (Round 3).

Figure 1. Daily distribution of PPP loans to forest products companies in three rounds of funding, April 2020 through May 2021.

The majority of PPP loans (44%) were provided in the third round of funding. Elsewhere, 26% and 30% of loans were provided in the first and second rounds of funding, respectively. There were 7,832 second draw loans from forest products companies that received a previous loan, or 23% of all loans.

Logging and other wood product manufacturing companies received 68% of all PPP loans (n = 23,399) provided to forest products companies:

Figure 2. Number of forest products companies that received PPP loans by NAICS industry classification.

Converted paper product manufacturers and pulp, paper, and paperboard mills received the largest loan amounts, exceeding $300,000 on average. These industries, along with veneer, plywood, and engineered wood product manufacturers, reported the greatest number of jobs supported through the PPP loan program.

Table 1: Average PPP loan amounts for forest products companies by NAICS industry classification.
Industry Num loans Avg num jobs Avg loan amount (USD)
Converted Paper Product Manufacturing 2,685 35.1 $386,856
Pulp, Paper, and Paperboard Mills 527 27.3 $328,594
Veneer, Plywood, and Engineered Wood Product Manufacturing 1,317 28.9 $270,508
Sawmills and Wood Preservation 2,433 19.3 $179,516
Other Wood Product Manufacturing 11,534 16.5 $151,465
Support Activities for Forestry 3,286 9.0 $75,662
Forest Nurseries and Gathering of Forest Products 702 8.6 $69,916
Logging 11,865 5.4 $52,232

The number of forest industry jobs reported in PPP loan applications was positively related to PPP loan amounts (p < 0.001, \(R^2\) = 0.799). Most applications reported that the PPP loan would support fewer than 20 jobs with loans amounts lower than $200,000.

Figure 3. Number of forest industry jobs reported in PPP loans, with darker areas indicating greater number of loans.

The majority of PPP loans (60%) were provided to forest product companies at an amount less than $50,000. Loans greater than $350,000 represented 61% of the total approved value of loans to all forest products companies.

Table 2: Number and value of PPP loans provided to forest products companies, April 2020 through May 2021.
Loan size (USD) Num loans Total approved value (USD, millions) Percent of approved loans Percent of approved value
< 50K 20,561 371.1 59.9 7.9
50K - 100K 4,849 349.0 14.1 7.5
100K - 150K 2,317 286.5 6.7 6.1
150K - 350K 3,583 819.2 10.4 17.5
350K - 1M 2,136 1,211.4 6.2 25.9
1M - 2M 587 815.8 1.7 17.5
2M - 5M 156 481.1 0.5 10.3
> 5M 160 335.1 0.5 7.2

PPP loans provided to logging companies supported the greatest number of jobs (64,593) across all forest industries. Loan amounts to specific logging companies supported the smallest number of jobs on average, however, nearly 12,000 loans were provided to this industry.

PPP loans provided to companies in the softwood veneer and plywood manufacturing and folding paperboard box manufacturing industries each saw the greatest loan amounts on average, in excess of $600,000. Companies in these industries supported fewer total numbers of jobs across the industry, but a greater number of jobs supported within each company.

Table 3: Mean value and number of jobs supported by PPP loans provided to forest products companies by NAICS industry categories.
Industry Num loans Avg loan value (USD) Total loan value (USD, millions) Avg num jobs Total num jobs
Logging 11,865 52,232 619.7 5.4 64,593
All Other Miscellaneous Wood Product Manufacturing 4,383 115,618 506.8 12.5 54,589
Wood Container and Pallet Manufacturing 2,227 170,242 379.1 22.1 49,280
Sawmills 2,072 189,605 392.9 20.5 42,449
Support Activities for Forestry 3,286 75,662 248.6 9.0 29,579
Other Millwork (including Flooring) 1,971 148,024 291.8 14.9 29,408
Corrugated and Solid Fiber Box Manufacturing 712 459,317 327.0 40.1 28,576
Wood Window and Door Manufacturing 1,285 210,646 270.7 19.9 25,526
All Other Converted Paper Product Manufacturing 580 308,288 178.8 28.6 16,574
Paper Bag and Coated and Treated Paper Manufacturing 446 406,465 181.3 36.9 16,459
Hardwood Veneer and Plywood Manufacturing 484 289,663 140.2 31.9 15,445
Truss Manufacturing 427 304,794 130.1 34.7 14,806
Folding Paperboard Box Manufacturing 239 608,007 145.3 51.9 12,396
Prefabricated Wood Building Manufacturing 560 194,761 109.1 19.9 11,127
Manufactured Home (Mobile Home) Manufacturing 512 189,963 97.3 20.6 10,555
Cut Stock, Resawing Lumber, and Planing 596 154,953 92.4 17.2 10,249
Stationery Product Manufacturing 377 272,239 102.6 25.2 9,509
Paper (except Newsprint) Mills 303 336,451 101.9 27.7 8,401
Forest Nurseries and Gathering of Forest Products 702 69,916 49.1 8.6 6,011
Other Paperboard Container Manufacturing 195 263,462 51.4 28.7 5,603
Sanitary Paper Product Manufacturing 136 384,273 52.3 37.4 5,089
Wood Preservation 361 121,609 43.9 12.8 4,609
Softwood Veneer and Plywood Manufacturing 65 656,330 42.7 49.2 3,200
Paperboard Mills 96 339,076 32.6 32.6 3,126
Engineered Wood Member (except Truss) Manufacturing 120 234,258 28.1 24.7 2,960
Pulp Mills 83 361,594 30.0 26.7 2,212
Reconstituted Wood Product Manufacturing 221 68,515 15.1 7.4 1,638
Newsprint Mills 45 192,463 8.7 14.1 634

California forest products companies received the greatest number of loans (1,951) and the largest amount ($357 million) across all US states. Six other states received in excess of $200 million each in PPP loans to forest products companies: Oregon, Pennsylvania, Ohio, Texas, New York, and Wisconsin.

Figure 4. Total value of PPP loans provided to forest products companies.

The District of Columbia, receiving just 10 loans to forest products companies, saw the greatest average loan value at $286,851. The US Virgin Islands, Hawaii, Vermont, and Wyoming saw the smallest average loan value, each less than $60,000.

Table 4: Mean value and number of jobs supported by PPP loans provided to forest products companies in each state.
State name Num loans Avg loan value (USD) Total loan value (USD, millions) Avg num jobs Total num jobs
Alaska 68 70,453 4.8 7.4 501
Alabama 1,315 114,926 151.1 12.3 16,177
Arkansas 1,060 75,916 80.5 8.8 9,348
Arizona 234 145,587 34.1 20.1 4,696
California 1,951 182,978 357.0 18.3 35,656
Colorado 393 129,619 50.9 12.8 5,043
Connecticut 324 194,789 63.1 14.5 4,689
District of Columbia 10 286,851 2.9 22.4 224
Delaware 38 171,529 6.5 17.4 660
Florida 1,367 114,462 156.5 12.9 17,665
Georgia 1,452 120,324 174.7 13.8 19,998
Hawaii 76 48,066 3.7 5.0 380
Iowa 325 75,555 24.6 8.6 2,796
Idaho 409 110,577 45.2 12.6 5,160
Illinois 965 162,406 156.7 15.5 14,965
Indiana 709 179,610 127.3 18.5 13,093
Kansas 191 222,639 42.5 20.1 3,843
Kentucky 988 94,768 93.6 11.0 10,881
Louisiana 735 93,690 68.9 10.2 7,526
Massachusetts 408 211,122 86.1 17.1 6,978
Maryland 260 189,784 49.3 18.1 4,699
Maine 815 94,417 76.9 10.7 8,682
Michigan 1,220 163,240 199.2 17.1 20,814
Minnesota 820 118,914 97.5 11.9 9,790
Missouri 1,378 68,356 94.2 7.6 10,436
Northern Mariana Islands 2 74,772 0.1 20.5 41
Mississippi 1,240 70,976 88.0 9.0 11,108
Montana 296 65,735 19.5 7.6 2,251
North Carolina 1,207 130,099 157.0 14.3 17,279
North Dakota 59 133,400 7.9 13.6 805
Nebraska 142 126,435 18.0 14.1 2,000
New Hampshire 291 120,987 35.2 10.4 3,033
New Jersey 468 247,511 115.8 21.6 10,106
New Mexico 101 127,104 12.8 16.3 1,650
Nevada 115 148,749 17.1 15.8 1,815
New York 1,268 169,765 215.3 16.9 21,371
Ohio 1,050 211,002 221.6 22.1 23,195
Oklahoma 370 79,098 29.3 9.8 3,634
Oregon 995 237,566 236.4 22.9 22,833
Pennsylvania 1,334 167,071 222.9 16.3 21,786
Puerto Rico 92 61,682 5.7 13.3 1,223
Rhode Island 96 200,166 19.2 20.9 2,010
South Carolina 603 142,011 85.6 15.3 9,211
South Dakota 148 82,809 12.3 8.5 1,255
Tennessee 1,233 77,194 95.2 8.9 10,992
Texas 1,509 142,941 215.7 15.3 23,045
Utah 211 137,323 29.0 16.9 3,566
Virginia 883 140,478 124.0 15.6 13,812
U.S. Virgin Islands 3 34,812 0.1 7.7 23
Vermont 286 56,104 16.0 5.5 1,583
Washington 872 199,662 174.1 16.9 14,776
Wisconsin 1,508 141,524 213.4 14.1 21,266
West Virginia 377 78,735 29.7 9.8 3,707
Wyoming 78 59,276 4.6 6.7 525

Last year, Pelkki and Sherman reported on each state’s economic contribution from the forest industry. It seems useful to compare a state’s use of PPP loans to the contribution of forestry to GDP in that state. The table below shows the rankings of total contribution of forestry a state’s GDP (compiled from Pelkki and Sherman 2020; their Figure 2) alongside the ranking of total PPP loan amounts provided to states.

Table 5: Rankings of highest total contribution of forestry to state GDP (from Pelkki and Sherman 2020) and total PPP loan amounts to states.
State Total contribution to GDP rank Total PPP loan value rank
California 1 1
Pennsylvania 2 3
Wisconsin 3 7
Georgia 4 9
North Carolina 5 11
Texas 6 5
Ohio 7 4
New York 8 6
Tennessee 9 19
Alabama 10 14

Rankings for each state are generally consistent with a few notable exceptions. States in the Pacific Northwest (Oregon and Washington) along with Michigan were “PPP winners”, obtaining a greater proportion of PPP loans relative to their state’s economic contribution to GDP. States in the southeastern US (Tennessee, Alabama, and North Carolina) ranked in the top ten for total contribution to GDP but outside of the top ten in their total value of PPP loans requested.

Conclusion

In total, PPP loans to the forest products industry helped to support 485,000 jobs with loan amounts totaling $4.7 billion. Over 34,000 loans were offered to forest products companies in the US from April 2020 through May 2021 through the PPP program. Funds for the PPP program ran out three weeks earlier than expected in early May, pointing to a slow economic recovery across US businesses. In the forest products industry, PPP loans have no doubt helped companies to keep workers employed in this essential industry.

By Matt Russell

Code and data that produced this article is available on GitHub.

Email Matt with any questions or comments. Sign up for The Landing for monthly in-depth analysis on data and analytics in the forest products industry.

Testing the assumption: Half of the biomass of a tree is carbon

June 18, 2021
analytics carbon forest measurements

Forest carbon cheat sheet: updated for 2021

June 12, 2021
analytics carbon forest measurements forest products climate

How well does the "quick and dirty" standard deviation approximation work?

June 6, 2021
analytics Data science statistics teaching statistics standard deviation