With the coronavirus crisis continuing to severely impact small and medium-sized businesses all over the country, companies have turned to new aid options from the federal government for help, including the Paycheck Protection Program (PPP) and tax relief. These aid options have been popular thus far and overwhelming demand for PPP has caused the program to run out of money quickly.
At the fourth National Small Business Town Hall, held on April 17 by the U.S. Chamber of Commerce and Inc., a panel of experts discussed the current status of the PPP, how to know if your business secured a loan, alternate aid options and much more.
During the Town Hall, Inc. editor-at-large Kimberly Weisul spoke with several business leaders, including Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce; David Barron, member at Cozen O'Connor; Manny Cosme, President and CEO of CFO Services Group; Marilyn Landis, president and CEO of Basic Business Concepts, Inc.; and Dan Martini; VP of Congressional Relations and Public Policy for the American Bankers Association.
Here are five important takeaways (among many) from the panel that may assist SMBs in trying to navigate federal coronavirus aid programs.
While the SBA has run out of money for PPP, it should be replenished soon
One of the most important federal developments for small businesses to understand is that federal funding for the PPP has depleted, meaning all $349 billion in forgivable loans have been approved by the Small Business Administration (SBA). However, every member of the Town Hall panel said they were optimistic Congress will soon approve additional funding for the PPP program, to the tune of at least $250 billion.
“We are in a momentary pause and we expect Congress to restore money [to PPP],” Bradley said. “We think it will get done early next week, but in the meantime, most of the lenders we are talking to are accepting applications … for small businesses. If this is something you were planning to do today, go ahead and reach out to that lender and start the process.”
We really need to be thinking about how we are going to grow our way out of this situation ultimately.
Manny Cosme, president and CEO, CFO Services Group
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How to know if your business secured a first-wave PPP loan
Many businesses may be in a situation where their lender has approved the PPP application and sent it to the SBA for approval, but they are unclear if they got the loan. If the SBA approves the loan, then it will generate a unique loan origination number that effectively signifies you will receive it.
“If you’ve already gotten that loan origination number from the Small Business Administration or your lender has that, you are part of that $349 billion and you should be getting your loan disbursed,” Bradley said. “The thing to check on is where you are in that approval process.”
The EIDL program may be replenished as well
Bradley noted that the Economic Injury Disaster Loan (EIDL) program, which originally was giving out $10,000 cash advances, has also run out of money. Bradley said he believes the EIDL program will eventually be restored and those loans are suitable for non-payroll expenses such as rent, mortgage, etc.
Businesses should be careful about making cuts while waiting for PPP or EIDL loans
Cosme said that small businesses may be tempted to quickly make cuts right now to conserve cash, but he cautions business owners to run those cuts through financial projections first.
“Keep in mind that every cut that you make is going to cut into your ability to generate revenue or keep your business going, which is not something you want to be doing right now,” Cosme said. “I know these federal programs are great and provide ‘quick money’ ... but these were meant as a bridge. We really need to be thinking about how we are going to grow our way out of this situation ultimately.”
Businesses should consider aid other than PPP
Cosme also said that businesses should not wait solely for a PPP loan and to seek out other aid immediately, including state, local, and private programs available. He also suggests looking at other parts of the CARES Act that can help businesses immediately, including the Employee Retention Tax Credit and payroll deferral.