PPP (Payroll Protection Program) data is a goldmine ⛏️ for a small business buyers and small business owners alike.

Even years later, I still think it’s the best free publicly available data source of SMBs to ever exist. I’m excited to show all 3,702 of you the power of turning dumb data into actionable information (in a super short amount of time).

In less than 10 minutes…I found 95 Flooring Contractors in Texas, estimated their revenue & EBITDA based on their PPP loan data (6 steps):

1. Get PPP Payroll data for the specific NAICS industry code & geography into a spreadsheet

   This data only includes PPP loans for >$150K (2.5 months of payroll was the calculation). That’s $720K of payroll annually which means the majority of businesses on are doing >$2M of revenue. A nice filtering mechanism so we aren’t looking at businesses that are too small. There are 965,552 loans in this excel file…so filter by geography (TEXAS) and NAICS code (238330 is flooring).

   Original SBA data source: https://data.sba.gov/dataset/ppp-foia/resource/4b3c3e7a-1286-4883-b857-d37058f9693c

2. Calculate annual payroll (PPP loan is 2.5 months of payroll). ‘CurrentApprovalAmount’ is the PPP loan amount. This is where the magic starts and the basis for why this data is so awesome. It’s the amount of wages that company paid to W2 employees over a 2.5 month period (not perfect since there are some other costs, but vast majority especially at this size loan are people costs). We’ve never had payroll data details at this granular of a level in history.

3. Estimate what payroll is as a % of revenue.
   This will be industry and business specific so you have to use your experience or do some desktop research here. I know a flooring contractor uses a significant amount of labor, I guessed 30% of revenue would be labor cost…This could be wildly off, but it’s best to make an assumption and refine it as you learn more. On the flip side, a distribution company would have much lower labor as a percent of revenue compared to a flooring contractor.

4. Estimate the company’s annual revenue.
   Simple calculation.

5. Get estimated EBITDA (using your estimate of EBITDA margins typical for this biz).
   Again, it is very helpful to filter by a particular industry because you can assign industry insights to the data to make it stronger and more actionable.

6. Refine your list further by filtering by your minimum EBITDA threshold.
   🎉🙌 BAM! Now you have a solid target list of 95 flooring contractors located in your geography. Many ways to slice and dice the data to get what you want for your goals. Use this as the foundation, then improve on it.

What to do with the list now?

I’d recommend finding a service or hiring a contractor on UpWork to sanitize the list, find the key decision maker (owner, CEO) contact info, then do direct out reach. Call them, drop in, do whatever you’d like.

The first company on the list is A-1 Floor Covering, Inc. You can go to google, search for the company name. As you can see, it’s a legit company: https://a-1floors.com/

Using AI / ChatGPT with this data?

At one point, ChatGPT was working gloriously to do some of the automatic identification of key information about a company not included in the PPP data (company website, phone number, # of physical locations in Texas, # of google reviews, if the company website references countertops in addition to flooring, etc). However, now it throws off an error message about not having access to real-time data. Lame. I’m sure there’s an alternative out there.

Why is the PPP data so important as a foundational data source?

Small businesses & its data has flown under the radar, they have no reporting requirements like public companies do. Information has been disparate & difficult to find. Tools like ZoomInfo help us identify contact info for mid and enterprise companies, but the small business end of the market the data is still pretty bad (although it is getting better though over time, with many software tools capturing the PPP data and displaying it in their own way).

SMBs may have less presence or brand needed in public to conduct business. The owner may be averse to publicly identifying themselves in their niche for fear of competition or someone identifying them. PPP brought to light many businesses that have been hiding in the shadows. I know a building products company owner pulling in $5M of EBITDA annually and their website looks like its from the early 1990s, he was identified on the list since he took PPP dollars. Now he’s been outed and you can now find him.

What about fraud?

Yes, fraud has muddied the PPP data water, however the fact that there are some illegitimate targets included in the list doesn’t reduce the list’s inherent value by much. The SBA conducted a review of the $1.2 trillion dollars distributed and has identified over $200 billion in potentially fraudulent. This means at least 17 percent of all COVID-19 EIDL and PPP funds were disbursed to potentially fraudulent actors. More details here. You can probably even filter out for identified fraud if you wanted to do that extra work.

Other Use Cases for the PPP Data:

You recently acquired a company and want to find add-ons in your geography or in other niches (currently doing this myself)

You sell services to a particular business type or size, identify them easily in this data

You want to sell your company, identify potential acquisition targets (bankers have already scrounged these lists for potential buyers)

A small business owner could see payroll & staffing of competitors or in industries she wants to enter into

And much more…

And 2 tweets I thought you might find helpful & interesting to asses if a selling owner is essential to a business:

1. 5 questions you need to ask the seller

2. How to identify a seller who is too important to the business

Looking to….?

• invest passively in SMBs? Join Accredited investors only…check out the SMB Junction Capital Connector investor network to get in the flow of off-market deals (self funded, independent sponsor, private equity)

• raise equity capital? Submit your deal under LOI for free to the SMB Junction Capital Connector to get intros to value-add accredited investors

• read a new newsletter? For Wall Street and high finance memes check out the Transacted newsletter for and for public equity trading ideas and strategies subscribe to the Bullseye Trades newsletter 

The SMB Scoop 

Ben Tiggelaar

Things I’m currently working on: www.bardocapital.com, www.smbjunction.com, [acquisition made in June 2023 to be announced…]