On Thursday, April 16, the Small Business Administration announced that emergency Paycheck Protection funding under the CARES Act had run out. For the 30 million small businesses in the U.S. the relief funds were supposed to help, just 1,661,397 loans were approved. The SBA’s long-running but massively underfunded Disaster Relief loans are also tapped out.
Meanwhile, small business owners across the nation reported trying to apply and being stymied at every turn. They were told they had to have a business checking account with the bank; that the backlog of loan applications was too large to take any more, please check back later; that banks were giving priority to businesses already customers of the bank. Some applicants report they were simply “ghosted.” And now, any business that managed to get into the application queue will have to start all over again should more funding become available. Maybe we need to rethink the first come/first serve application process…
As for businesses who did manage to have emergency loans approved, many are still awaiting funds. The typical small business has barely a month of cash reserves; we are already past a month into shutdowns.
In Washington, The U.S. Treasury Department requested an additional $251 billion for small businesses, even as banking experts calculate the need may be closer to $1 trillion. Congress and Treasury Secretary Steve Mnuchin (characterized as being “surprisingly responsive” in this moment by Washington insiders) negotiated behind closed doors to craft a deal for additional small business relief, but Congress adjourned for the weekend without an agreement, amid finger-pointing on both sides. (In this moment, can’t we agree we’re all on the same side?)
Should additional funding be made available, small business owners may want to reach out to digital banking services, community banks or credit unions, all newly enrolled as SBA emergency relief lenders. Digital lenders may have less bureaucracy to navigate, and community banks/CUs are more community focused than big banks. We recommend looking for a lending partner now and finding a representative to work with.
Remember that our friend and financial maven Vince Dong is available to talk you through adjusting finances and figuring out a 90-day plan to get through the COVID-19 shutdowns. Email him at email@example.com.