Local business owners share their experiences in applying for U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP)
Story by Phyllis Jones, SON Sr. Staff Writer
For the past two weeks or so, it was like Christmas in April for many small business owners, who had to lay off a significant number of their staff and/or close their doors, due to the coronavirus pandemic. These businesses were recipients of funds from the long awaited U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP).
The U.S. SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steven T. Mnuchin issued a joint statement regarding the success of the PPP. The statement says in part, “PPP provided payroll assistance to more than 1.6 million small businesses in all 50 states and territories. Nearly 5,000 lenders participated in this critical program, including significant lending by community banks and credit unions.”
The numbers reported seems impressive, however, a significant number of small businesses, are still waiting for funding. Unfortunately last Thursday, as some were celebrating the receipt of their PPP funds, others were in shock from the devastating news that the PPP funding had been exhausted. Small business owners had been encouraged to apply for the PPP. These loans are forgivable if used for payroll, rent, mortgage interest, or utilities.
Approximately $349 billion was allocated for the PPP. However, $6 million of this amount was used for lenders fees. In addition, some businesses who were not so small, received an astronomical amount of funding, just because they had less than See BUSINESS LOANS, pg. 7
500 employees. Those who received $10 million include, but are not limited to Shake Shack, Potbelly Sandwich Shop, and Hallador Energy. Ruth’s Chris Steakhouse received $20 million total for two subsidiaries. After what some believed to have been public shaming, Shake Shack, who has $100 million in cash on hand, plans to return their $10 million received from the SBA.
Representative Anthony Daniels (District 53) shared, “Alabama businesses applied for a total of 27,922 loans, resulting in $4.8 billion.
” Even though the opportunity for small businesses to apply was given, not everyone jumped on the PPP bandwagon and not everyone who did apply, has received their funding yet. The following local business owners share their experiences.
ANONYMOUS (OWNER – SOFTWARE COMPANY)
SON: Did you apply for the PPP and if so, how was the process?
Anonymous: Yes, I did. There wasn’t anything frustrating about the process.
SON: Have you received your funds?
Anonymous: Yes. I applied Friday, April 10th and my funds were deposited into my account Wednesday, April 15th.
SON: So, your turn around time was rather quick.
Anonymous: I understand why some people who applied didn’t get their money. If you do not have your business in order, you will not be able to receive a loan. I applied for the SBA PPP through Redstone Federal Credit Union. They request your taxes for the past three years and your payroll tax records, to prove you paid employees.
SON: What advice can you share with others?
Anonymous: This is a bad situation, but I encourage business owners to be prepared with a plan to go after the dollars. I saw too many people procrastinating and complaining on social media, but they were not being proactive to do what needs to be done to get what they needed.
ALLEN NOBLE (OWNER – NOBLE CHEFS)
SON: Did you apply for the PPP and if so, how was the process?
NOBLE CHEFS: I have not applied. Due to our company’s pivot to Noble Chef’s Curbside Services, we have been able to maintain operational overhead.
SON: If the “shelter in place” ban is fully lifted, do you believe you will return to your full operating status, before the pandemic and be financially ok?
NOBLE CHEFS: Once the ban is lifted, we will be able to return to full operation. However, a significant amount of business and income has been lost. Some record breaking projections for us have been eliminated.
SON: It has been mentioned that a second coronavirus outbreak is possible later this year. If that is the case and the government offers financial relief for small businesses, would you be more inclined to sign up?
NOBLE CHEFS: I would be inclined without a pause.
DR. TENESHIA DANIELS (OWNER AND PRACTICING DENTIST – PREMIERE DENTAL)
SON: Did you apply for the PPP and if so, how was the process? DR.
DANIELS: Yes, I applied. The process was very complicated, but I am thankful for my accountant because he had everything in order. My bank had their own process and application and my funds have been received.
SON: Do you think small businesses are getting a fair advantage for this service?
DR. DANIELS: I don’t think that “real” small businesses are a fair advantage. The SBA definition for a small business is a company with 500 employees or less. This is not a typical small business. Most big banks focused on large, small businesses and therefore the actual small businesses, who need the PPP did not receive the money.
SON: What advice would you offer small business owners who are struggling and haven’t applied for a loan yet?
DR. DANIELS: My advice would be to keep your overhead at a minimum during this time. Inquire if your landlord will delay your rent payment and see if waste management and cleaning companies will cancel payment until further notice. Save every dime you can. The future is so uncertain.
REGINALD MCKENZIE (RESTAURANT OWNER AND DIRECTOR FOR A NONPROFIT)
SON: Share your overall perspective about the PPP and the Economic Injury Disaster Loan?
MR. MCKENZIE: Both the Economic Injury Disaster Loan (EIDL) Advance and the Paycheck Protection Program are great for small businesses, especially if you applied early.
SON: What are the advantages and/or disadvantages?
MR. MCKENZIE: I applied for the $10,000 EIDL advance on April 3, 2020, for my restaurant and encouraged several small business owners and non-profits to apply as well. The form was very simple, but lacked clarity. The amount of your advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The advance will provide $1,000 per employee up to a maximum of $10,000 and not $10,000.00 per applicant. This advance is 100 % forgivable. I’m still waiting to be approved for this loan.
SON: Did you apply for the PPP as well?
MR. MCKENZIE: Our 501C (3) non-profit applied for this loan. We were approved last Friday, but we have not received the funding yet. The form is simple to complete, but some companies and nonprofits are paying a 3rd party to complete their application. It is best to have a good working relationship with your bank and/or credit union. Our credit union business relation representative was awesome. A true advocate and guided us through the entire process.
SON: What concerns you the most about small businesses and the lack of access to the SBA funds?
MR. MCKENZIE: My main concern is that a lot of small businesses, especially minority businesses, will be left out. There was one 501C (3) organization I called, in regards to applying for the PPP Loan. I was informed that their bank did not encourage them to apply. I encouraged them to call the bank back and let the bank know that they wanted to apply. Their application was completed last week and submitted to the bank. Lenders began processing loan applications on April 3, 2020. The Paycheck Protection Program will be available through June 30, 2020; however, they ran out of money very quickly and Congress is working on Phase II of the funding. It will be interesting to see a report from the SBA, banks and/or credit unions detailing the number of businesses/ non-profits applying by size, ethnicity, race, sex, number of years in business, loan amount to include number of businesses denied and reason for such denial. There should have been a process put in place by banks/credit unions to ensure a fair percentage of the funding was allocated to both majority and minority businesses/non-profits. Also, look into Main Street Lending Programs. These loans aren’t forgiven, but it can be an additional financial resource for your business/non-profit.
When asked about the breakdown of funding for minority businesses, Representative Daniels stated, “The CARES Act did not earmark a portion of the PPP allocation for certain geographic areas, industry sectors, businesses with certain types of ownership, or any other category. Nationwide data on PPP usage is broken down by the SBA into industry sector, state, and loan size. Unfortunately, there is no way to determine either from the CARES Act itself or from the usage statistics what percentage of the $349 billion went to minority owned businesses.”
Representative Daniels also shared information on how small businesses can acquire additional aid if needed. “The Department of Revenue will allow businesses with monthly retail sale equal or less than $62,500 to file their sales tax returns without paying the state’s sales tax reported due. Apply for the EIDL and check local resources such as https://atlasalabama.gov/local-covid19-resources/.”
So, where do small businesses go from here? Continue to stay abreast of the latest PPP funding developments. Prayerfully, the members of Congress will solidify a deal sooner than later, whereas ALL small businesses/non-profits will be created equal and will receive a piece of the PPP pie.