Did the PPP run out on you?

If you were excited, like me, that the government finally created a program to help Small Businesses survive an economic (health) crisis, only to be totally disappointed today. You are not alone. 

Owning a Small Business takes an optimistic vision, at the same time we take on the stress of ensuring our business is at a minimum, supplying a steady paycheck for our employees. The Covid-19 crisis has added to that stress because our "Normal" working environment has been disrupted. Our regular clients who provide the baseline steady income we rely on each month have been negatively impacted by this crisis, which in turn affects us.

The Payroll Protection Program, the way it was presented by our government was meant "for the little guys", "small business", "to help the "mom and pop shops" make it through this crisis, to keep employees on payroll, it made total sense. I could get really get behind this. This program had all my boxes checked: Who, What, When, Where, Why and How. 

The How is what got us!

The How was the Government would put all the "work" for this on the Banks. All the Government was going to do was "100% Guarantee the loans for the banks" plus provide service payment to the bank for processing the loans.

In March I had started preparing for the program. I signed up and watched numerous webinars put on by the SBA, a couple of free sessions provided by a few of the Organizations/Associations we are members of that included input from Lawyers and Accountants, and the one held by our Bank regarding this program. I was ready!

Here is my banks email:

Thank you for attending What Does the Paycheck Protection Program Mean for You: Relieving Financial Strain during COVID-19.

We had our payroll 941s, tax records and lease/utility bills at the ready for when they were needed. On April 3rd the SBA announced the program was ready to Roll out, however our bank said they needed "further guidance" from the SBA before they could roll out the program for their bank customers. They further provided a web form where you could input your email in and they would notify you via email when the program forms were available.

I signed up for this on April 5: here is the email I got from the bank:

Dear Business Client,

We received your SBA Paycheck Protection Program inquiry, and know that you may need this funding urgently. We appreciate your patience as our technology teams and our bankers work to help you access the funding as quickly as possible.You will receive either:•An email asking you to go online to complete your application or•A call to complete your application over the phone Our branch and call center teams can’t answer any questions about the program or the status of your loan.

On April 6 I logged into my bank account and saw that the COVID-19 info button had changed. I clicked on it and the application was available! I immediately started filing out the info. It was actually short and easy and I had all the info I needed to complete it. There was my application loan number on the screen. We were in!

Here was that April 6 email:

Paycheck Protection Program loan application. We received your Paycheck Protection Program loan application. You’ll receive your loan decision by email

The following day April 7 the Bank announced via email that the portal was ready to start processing applications:

We encourage you to take action quickly so you don’t miss this opportunity. The SBA has set a funding cap on its Paycheck Protection Program.

Dear Business Client,

We urge you to go online now to complete the next steps for your Paycheck Protection Program loan.

I clicked on the link in the email and it took me right to the page with the form I had filled out the day earlier. I thought back to each of the seminars/webinars and could remember them saying, the program is a "first come - first serve", get your application in "earlier rather then later", "be prepared with the info"

I had did it! I had to be an early entrant, at least at my bank, I had filed online before they announced their portal was even ready.

As the days went by I kept checking my email for the loan approval. I would every now and then get the generic emails from my bank, with each one repeating the mantra:

Our branch and call center teams can’t answer any questions about the program or the status of your loan.

On April 15 I saw the headlines that the PPP program was running out of funding. I called (No Answer) and then emailed our business banker and received the following email back on April 16:

I wanted to reach out and give you an update on the PPP process. You may or may not have read that the SBA announced that the available funds for the PPP loans became exhausted late last night. If you have not received funding yet there are still thousands of clients who will be receiving their approved funds today and into tomorrow. If you were not able to get funding in this 1st round please know that our plan is to continue to work all remaining applications as much as possible so we have as much pending when the 2nd round of funding hopefully opens. 

At this moment I am still unable to see where your application is in the process. My understanding is that by end of day tomorrow you would see money in your account if you received PPP funding from this 1st round. 

We have a call this morning at 11:30 and I’m hoping to share more information with you after that call. 

I know this is exceptionally frustrating on many levels and I truly sympathize with all my clients and the real struggles that they are going through. More to follow….

Without hearing back from my banker after this, I received this email this morning April 17 from my bank:

Dear Business Client,

As predicted, the SBA’s Paycheck Protection Program was hugely popular. In fact, we have learned the SBA has approved loans that will exhaust all the funding available for the initial round.

We have notified all of our customers who received funding in the first round. We understand that many of you are disappointed, and are frustrated because we haven’t updated you on the status of your application. We will do better, starting in the next few days.

Here is where we look at the HOW of what just happened:

When I read the Headlines "Ruth Chris Steakhouse secures $20 Million in PPP funding for its employees" it was obvious. The IRS defines a small business as a business with 500 employees or less. So although the program was designed for the "Small Business"or "Mom and Pop Shop" type businesses, the ones who employ 4 or 40 or somewhere in between, it didn't get to them.

The big banks would rather make 1 Loan for $20 Million rather than 100 Loans for $20 Million. A bank is a business and they make more money this way!

This government program left the HOW up to the Banks and they are trying to find the best way to make the most money off of this Crisis. Instead of following SBA recommendations of process the loans "first come first serve" the banks organized the loans biggest to smallest.

The federal government told the banks we don't have time, so you run the HOW and all we will do is "Back the loans 100%" plus pay you a "processing fee" to do this quickly for us. So the banks did. But the big banks decided, you know we can make a lot of money off of this by processing as much money as we can on the least amount of loan paperwork possible. So they did! Screw the little guys!

This is how we got passed over. I didn't once post the name of my bank here, because we still have to work with them (For Now) I think all small businesses need to rethink their banking strategy after this. I know we will.