The US government PPP handouts, meant to help businesses from COVID-19 storm, has also reached many crypto companies. More than one hundred companies dealing in crypto and blockchain technologies have been given aid under the COVID-19 relief program called Paycheck Protection Program.
As per the latest loan data figures released by the US government’s Small Business Administration (SBA), around 100 crypto companies have received millions of dollars in aid to prevent disruptions due to COVID-19 lockdowns. Detailed analysis of the loan data reveals unique insights into the survival of the crypto realm in pandemic times.
Crypto sphere emerges unlikely benefactor of US government PPP
The SBA data has garnered significant attention, especially from the crypto community. The figures reveal the actual scale of some of the biggest firms operating in the crypto realm. To truly understand the dynamics behind PPP loan distribution, one has to know the criteria. Companies were given PPP aid on the basis of their payroll expenses, which ultimately depends on the number of employees.
SBA data shows that the average payroll in most of these crypto firms stands around $100,000. Most of the beneficiary crypto firms are classified as small businesses under the registered corporation category. It goes on to show that the centralized system has come to the aid of the disruptive decentralized economy.
Companies with high employee strength are eligible for bigger loans under the US government PPP program. Keeping this factor in mind, ConsenSys tops the list of companies falling in the $5-10 million categories. It is interesting to note that ConsenSys recently underwent staff downsizing and restructuring.
A lifeline for small blockchain companies
The blockchain arena is still in nascent stages. Hence, most of the crypto companies availing US government PPP loan facilities are classified under the lowest loan bracket. The whole crypto sphere received $42 million to help under the PPP program.
The primary objective of the US government PPP program is to prevent staff layoffs. The concept is to help small businesses tide off the COVID-19 pandemic. The loan conditions also include the retention rate – a factor that companies must strive to increase.
However, no such data has been released by the SBA. Mass layoffs would negatively impact a company’s rating. Since the majority of companies are small businesses, the retention rate is likely to be high anyway.