The coverage of the Paycheck Protection Program and PPP forgiveness has been so vast that many of the additional loans, grants, and other aid given since Coronavirus shutdowns began in March have been brushed to the side. With such a focus on the forgiveness of PPP loans, many loan recipients who received additional government aid may be in for a shock when they determine their forgiveness amount.
The Paycheck Protection Program is top of mind for many small businesses, CPAs, and lenders. Understandably, many loan recipients are chomping at the bit to begin the forgiveness process and have some certainty regarding their payback amount. While the eagerness to get the PPP forgiveness process started is not unfounded, experts are advising against getting in a rush to apply. There are many reasons waiting might be the best option.
It has been several days since the second round of PPP loan processing began. Bankers were hoping for a smoother ride this go-around, but many of the same problems that plagued the first round of the Paycheck Protection Program are still on the scene in round two.
Just thirteen days after its launch, the $350 billion Paycheck Protection Program fund (part of the $2 trillion COVID-19 stimulus package) had exhausted all funds. There have been talks of more funding coming, but this has left questions circulating like: Are more funds coming? How much more? When?
There are two legitimate concerns when thinking about reopening the country: the physical health and well-being of citizens and the economic health and well-being of citizens. President Trump’s initial hope to see the country reopened by Easter was met with a lot of backlash from healthcare professionals and economists that said it was too soon and would wind up doing more harm than good. While obviously that date has come and gone with no uplifting of shelter-in-place and other social distancing orders, the push to reopen sooner than later is not unfounded. Yesterday, the president announced the ‘Opening Up America Again’ plan aiming for May 1st.
If you’re in the banking or small business industry, you’re more than likely aware of the Small Business Administration’s Paycheck Protection Program (PPP) that begins today, Friday, April 3rd, 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This program is designed to help small businesses.
Traditional thinking says that the risk banks make lending to small companies rarely outweighs the profits. Recent relationships between the small business community and fintech startups are causing lenders to reevaluate this line of thought.
Although there was a slight dip in December, the NFIB (National Federation of Independent Business) Small Business Optimism Index saw one of the highest yearly survey readings in 2019 since the creation of the survey in 1973. According to the December survey results, “an increased number of small business owners reported better business conditions and expect higher nominal sales in the next three months,” and “small businesses continued to hire and create new jobs with actual job creation.”
Small Business Saturday is an annual tradition that occurs the Saturday after Thanksgiving. Locals are encouraged to “shop small” and show support to the diverse businesses in their community. The holiday was created by American Express in 2010 and has seen rapid growth every year since.
Community banks can have a tremendous effect on the success of the small businesses around them. For decades, community banks have been the backbone to entrepreneurship in America and are critical in the start-up phase of small businesses. Community Banks are responsible for over 40 percent of all small business loans awarded in America1. This shows that small businesses are more likely to receive the help they need from community banks than their larger counterparts.