How to Get Your Share of the NEW PPP Money

April 24, 2020      Roger and Kevin

Congress has passed and the president has signaled he’ll sign into law the legislation that makes an additional $321 billion available to small businesses and charities.

We offer up some practical suggestions to perhaps help Agitator readers increase your chances of getting money.  Because, as it turns out, the money does not flow based on need nor circumstance but instead, a labyrinth of unintended consequences.

But before we get there, these unintended consequences weren’t invisible or unpredictable and the blame for this must be laid at the shore of the swamp of ineptitude that is Washington.  Here’s why:

  • There is zero requirement to show that your business took a revenue hit from Covid-19.You’ve got to paper the proverbial walls with expense details but nary a single document for revenue.
  • All you need to do is certify that your business was impacted with language that is so nebulous that every Tom, Dick and Harry qualify.
  • To double down on this massive flaw, companies also needn’t show they had access to credit elsewhere.
  • This became an ethical decision, not a need decision.Many, many businesses took what amounts to free money.  Why free?  Because they were going to make payroll anyway, even without the money.  How?  Either because their revenue would allow it or they have a myriad of other credit sources to address depleted cash flow.
  • Addressing this didn’t require hiring forensic accountants or putting any more burden on the banks as lenders.The requirement to show a real (e.g. 25%, 50%, 100% loss) income hit could have fallen to the borrower to document, sign and certify, just like the expense side of things.
  • The free money, flashing neon sign with only ethical restraints preventing the legal, cash grab resulted in exactly what you’d expect, a free for all with billions going to firms that simply didn’t need it and certainly not in a relative sense.

You’ll recall that in the last round some big publicly-traded firms including Shake Shack, Ruth Chris and Potbelly were among the first to receive multi-million $ government-backed loans –loans that were intended to fight layoffs during the Covid-19 outbreak.

To be clear, these companies didn’t do anything illegal because the law is so fundamentally flawed.  These are restaurants with significant income hits and plenty of furloughed staff.  But, what these firms do have is access to tons of cash from equity and debt markets.  But, free money is hard to pass up and if you are a publicly traded company, chances are you know some well-heeled bankers who can lend a hand.

As the New York Times reported, “Private bank clients got “concierge treatment” at firms like Citigroup and JPMorgan Chase, like letting their banker submit their paperwork on their behalf and avoiding buggy online portals. That’s in addition to commercial-banking clients, like the national sandwich chain Potbelly, which got a leg up on applying.
Nearly all of the 8,500 commercial and private banking clients of JPMorgan who applied got a loan. Of the over 300,000 small-business clients who applied through its retail bank, only 18,000 did.
And the story repeated itself over and over with the Big Banks.  Community banks and small regional institutions did much better.  Still dozens of Agitator have reported their frustration.

To make matters even worse, round one applicants not only had to compete with the companies that didn’t really need the cash (at least in relative sense) but also had unresponsive and clueless banks to contend with.

A major determinant of whether you got money was your relationship with your bank and that bank not being bureaucratic, lazy and sloth-like.  And that label had nothing to do with bank size; the sloth exist among the mega-nationals and locals alike.  In short, it was randomness that played a hand.  The result?  Thousands of charities had trouble finding a bank that would process their applications….

Probably the best thing going for everybody in Round 2 is the public relations backlash that is brewing.  You can be damn sure that once this loan data is a FOIA request away from being in the hands of even a half-witted reporter they’ll be doing a sort on loan amount and digging in on the biggest amounts.  Some of those firms that would otherwise show up on that report will be reticent with this 2nd round.

Enough of a Rant..  How Do We Get This New Money?

If you want to know more about how to fill out your application or what’s involved with this program you can check out our original post and the Information Sheet we also published when the original CARES Act was signed into law. That guidance remains accurate.

So… where do we go to apply?

ONLINE.  If you want to avoid banks altogether you might want to try one of these two online services that make the process quick and simple. PayPal as a quick and easy process as does Kabbage.  For both of these easy-to-use services you’ll need basic information about your organization.  But when you have that in hand the process is truly quick and simple.  AND…they’ll keep you informed every step of the way.

In addition subscription service companies like Quickbooks, Divvy and Gusto should prove helpful.

BANKS.  If still want to work through a bank, then our recommendation –borne out by the frustrating experience reported by many readers—is to call several banks and establish multiple banking relationships. That’s right, this is no time for monogamy, so if your current bank isn’t helpful then open a checking account at another.

We especially recommend community banks, and small regional banks.  They’re the ones that proved most helpful in round #1. .

And hopefully, maybe the Big Banks like BofA and Chase will finally have their shit –and morals–together when it comes to the little guy.

Get Your Financial Information Together

The application for the PPP loan is simple, but there may be some follow-up documentation required by your bank or loan processor.  So, this would be a great time to gather all that.  Afterall, it’s likely there will be more loan/relief packages in the future.

Just so you’re prepared put the following in PDF format so you can attach information requested by the loan processor to an email. (you won’t need all of this for the PPP loan, but a well-run nonprofit should have it in one place anyway) in PDF format so you can attach the info requested to emails if requested by the loan processor

·      Mission Statement

·      Payroll logs

·      501 (c) (3) nonprofit certification

·      Lease terms/obligations

·      Insurance policies

·      Annual budget

·      Current financial report year to date

·      Three years of financial statements; preferably audited

Remember our advice last month for the first CARES Act?  The early bird gets the worm.  Well, same advice this month.  Apply now while funds last.

Stay safe.  Stay sane.

Roger and Kevin

 

 

 

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