Still problems with PPP

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There are still problems with the second version of the PPP, and it’s forcing many small businesses to make hard decisions.

Last week, groups that best understand the program urged the Small Business Administration to fix the problems. Even still, businesses are being denied based on technicalities that Congress said should not preclude businesses from getting funded. And the result is that cash-strapped businesses are now facing tough decisions on whether or not to keep employees on the payroll. Even worse, some businesses don’t have enough money to do so.

Understand problems with PPP

Here’s how the process works: You have a local bank (or any financial institution) and you qualify for this second round of PPP. Your bank has an application process, and you fill out all the fields, then you submit all the appropriate documents.

Who knows how long this delay will last, and we have to assume the SBA and its contractor are going to fix the glitch. Until that happens, these problems with PPP are going to cramp, if not cripple, a lot of small businesses.

But it’s not the bank that approves you for the PPP forgivable loan. Instead, the bank takes that loan and puts it in a portal hosted by the Small Business Administration. And it’s the SBA that ultimately approves your loan – not the bank.

And that’s where this thing is broken right now (and as of Tuesday morning, SBA and Treasury had not responded a request for comment from Politico.

The problem lies with applications from businesses that got a first round of PPP but haven’t necessarily had that first round forgiven (which isn’t supposed to matter in the second round). A lot of the applicants are being turned away by SBA.

And in other cases, there are businesses that are getting the wrong loan amounts.

How long until it’s fixed?

Look, this will all get fixed at some point, but the reason I think it’s a big deal is because there are a lot of businesses that are at the end of their cash rope. In fact, they were at the end of the rope in December.

The SBA held a call with banks almost three weeks ago to discuss the problem, and it was assumed the problems would be resolved, but that hasn’t happened. And one of the reasons is that banks are unsure of how to handle the issue. For that matter, this issue has been at the forefront of conversations for a number of weeks. Inc. Magazine had an article that detailed the problems, and those same issues are still plaguing both banks and the people seeking to borrow funds.

Who knows how long this delay will last, and we have to assume the SBA and its contractor are going to fix the glitch. Until that happens, though, this is going to cramp, if not cripple, a lot of small businesses. They’re already out of cash and they’re unwilling to borrow – even short-term. Especially when many of them are hearing they’ve been declined.

As for the PPP issue with the SBA and our banks, we’ll keep you updated.

 

Jonathan McElvy is the CEO of McElvy Partners. His company includes the Greensheet, The Leader, Fort Bend Star, Charlotte Media Group, Coastal Bend Publishing and Texas Printers. He has managed and owned small businesses for 20 years. If your business would like to talk more about your individual needs, click HERE for contact information. You can follow him on Twitter @mcelvy.

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