Disaster. Fiasco. Debacle. “That’s how the rollout of the Paycheck Protection Plan (PPP) was widely described,” USA Today reports. “PPP is the loan program aimed at helping small businesses and the self-employed keep their employees paid through the coronavirus crisis, with loans that can be ‘forgiven’ – in other words, turned into a grant. But frankly, it’s just a mess.”
As corporations drained the PPP dry, many small businesses who desperately needed funding are left behind. Thirteen days after its launch, the $349 billion PPP fund — part of a broader $2.2 trillion COVID-19 stimulus package — ran out of money.
“The Paycheck Protection Program (PPP) was supposed to infuse small businesses, which typically have less access to quick cash and credit, with $349 billion in emergency loans that could help keep workers on the job and bills paid on time,” the Associated Press reports.
“The Senate wanted these funds to go through banks instead of the Treasury Department or the SBA. This was supposed to get money to businesses faster. Instead, it created mass confusion and frustration.
Instead, “Companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy were among those receiving millions of dollars from a relief fund that Congress created to help small businesses through the crisis.”
Nationwide chains and companies recently revealed they received funds from the program designed for businesses with fewer than 500 employees before the $349 billion in funding ran out last week.
80 percent of PPP applicants are still waiting
The NFIB Research Center released a survey today on the small business loan programs. Small business owners were asked about the Paycheck Protection Program and the Economic Injury Disaster Loan on April 17, the day after the programs ran out of money.
About 20% of submitted applications have been fully processed with funds deposited in the borrower’s account, but 80% of respondents said they are still waiting, and many do not know where they are in the application process.
Most small business owners believe it will take beyond 2020 to recover from the economic impact of COVID-19, with only one-third of small business owners believing their community will get back to a normal level of economic activity by the end of the year. A quarter of owners believe it will not be until 2022 or later before the economy returns to normal.
“Small businesses were prepared and ready to apply for these programs, the only financial support options for most, and it is very frustrating that the majority of these true small businesses haven’t received their loan yet,” said Holly Wade, NFIB Director of Research & Policy Analysis. “Small businesses make up nearly half of the economy, and it’s crucial that their doors stay open.”
State-specific data isn’t available, but NFIB State Director Annie Spilman said, “Small businesses employ 5 million people in Texas. Unless Congress acts quickly to provide financial assistance, a lot of small businesses will be forced to close permanently, putting a lot of people out of work.”
Fast Facts: Many small business owners feel they’ve been left behind
About three-quarters of small business owners (almost all employer businesses) have submitted an application for a PPP loan as of April 17.
- About one-in-five (20%) of submitted applications have been fully processed with funds deposited in the borrower’s account.
- Nearly 80% are still waiting, many not knowing where they are in the process.
About 40% of small business owners successfully submitted an application for an EIDL through the SBA website.
- Among those who submitted an application, most (77%) requested the emergency grant of up to $10,000.
- Of those who requested the EIDL emergency grant, about 10% have received the funds.
- Essentially, all of the EIDL applicants (99%) have yet to receive the loan.
Most small business owners believe it will take beyond 2020 and into the years following to get back to normal economic activity.
- About one-third of small business owners believe their community will be back to a normal level of economic activity by the end of the year.
- Just under 40% believe more normal levels of economic activity will return in 2021.
- A quarter of owners believe it will not be until 2022 or later before the economy returns to normal.
The full survey is available here.
For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member-driven. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. For more information, please visit nfib.com.
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