The U.S. federal government's early small-business rescue plan saw it give money on states that were least hurt by the COVID-19 pandemic and overlooked some areas hit the hardest, but now that gap is closing.

States that got a smaller share of the first tranche of loans under the Small Business Administration's Paycheck Protection Program, including New York and New Jersey, are catching up in the second round, SBA data released May 18 show.

A report by Bloomberg shows that lending increased in New York, where businesses now have loan approvals worth 74% of eligible payroll as of May 16, up from 40% as of April 16. Shares were measured as a percentage of eligible payroll in each state, as estimated by Ernie Tedeschi, an analyst at Evercore ISI.

The first round of loan approvals took place between April 3 and April 16 and totaled $341 billion. Congress appropriated a second round of $320 billion, starting April 27, and as of May 16, the total of approved loans was $513 billion. That was lower than the total as of May 8, reflecting cancellations of almost $18 billion.

Among the top early beneficiaries of the program were Great Plains states, such as Nebraska and the Dakotas, whose governors never issued stay-at-home orders common in the rest of the country. Lending in those states slowed during the second round, the data show.

The U.S. remains the world's worst affected country by the COVID-19 pandemic, having registered more than 1.5 million infections and over 92,000 deaths, according to data from the Johns Hopkins University.

The pandemic has sparked massive job losses in the country, with unemployment claims reaching levels not seen since the Great Depression.

The latest figures from the Labor Department released on Friday showed the unemployment rate surging to 14.7 percent last month. It's the deepest downturn in the world's biggest economy since the 2008 global financial crisis.

States are now gradually reopening their economies in efforts to get back on track after weeks of battering.

President Donald Trump has backed the move to reopen the country, expressing optimism that the country’s response to the pandemic was adequate.

Source(s): Bloomberg