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UPDATE on the new Paycheck Protection Program (“PPP”). This is long-winded, but if you’re a small business owner, independent contractor, sole proprietor or self-employed, this post has some important information for you.

Over the last couple of weeks, the SBA and many lenders have been working hard to implement this program, and small businesses across the nation have been scrambling to apply. Here in South Carolina, more than $2.7 billion in loans have been approved to over 14,000 small businesses as of yesterday (Monday).

However, this hasn’t been easy - nothing of this size and scope ever is during the early stages.

From the perspective of small business owners, the application process has been cumbersome and for some it’s been difficult to find a participating lender. And from the perspective of financial institutions, their challenge was first just to understand the SBA’s new rules for this program, then quickly set up their internal processes, and now they’re trying to manage an overwhelming influx of applications.

From meetings with individual small business owners to conference calls with economists and Secretary Mnuchin, I’ve been working hard on this issue. Because this is a valuable program during the COVID-19 pandemic, and because the goal is to get financial relief to your business as rapidly as possible, I want you to understand what’s happening behind the scenes so that you can plan accordingly.

Here are some important things to remember:

🔵 FIRST, I realize there are numerous articles and social media posts (even from some politicians) that make this sound like a quick process. Friends, that is not the case anymore. Depending on your lender and your business’ unique circumstances, it could easily take several weeks or longer for your application to work its way through processing. Further complicating matters are two issues:

(A) Because these are SBA loans, lenders must perform due diligence on each application to ensure it meets eligibility requirements. That process itself takes a while, which is further compounded by the sheer volume of PPP applications.

(B) The Paycheck Protection Program has almost run through its initial funding. Last week the Senate tried to pass a clean bill to increase funding for the program. (By “clean” I mean a simple bill with nothing else added to it.) Unfortunately, this effort failed when our friends on the left tried to add a quarter-TRILLION in additional spending when the need for that additional spending has not yet been established. To be clear, Congress needs to come back around and debate additional funding for the PPP, and I hope that will happen soon… on its own merits.

All of this is to say that right now, applications for the PPP should expect to see delays in processing.

🔵 SECOND, it is CRITICAL to seek guidance from your financial adviser and tax professional. The PPP is one of a few options that might help you through this period, but it may not be the BEST option. There are other programs and loan types that could be better and/or faster given your unique situation. Only your professional advisors can help you with that decision. PLEASE seek their guidance and advice.

🔵 THIRD, if the Paycheck Protection Program is right for your business, the SBA has a new search feature to find participating lenders here:

https://www.sba.gov/paycheckprotection/find

If you’re having trouble finding a lender, don’t forget about some non-traditional options. For example, PayPal, Intuit, Square, Kabbage, and some other financial companies that aren’t necessarily known for lending are now stepping into this arena.

🔵 FOURTH, if your small business is in a crunch, you need a “Plan B” separate from the PPP. The last thing you should do is apply for the PPP and then wait for your loan to come through. Because we don’t know how long each loan will take to be funded, you should be aware of other options and know when you’ll need to pivot. Again, please seek the guidance of your business’ financial advisers!

🔵 FIFTH, please remember I’ll be hosting another live forum for small business owners this Friday at 11:00 AM, where you can get information directly from the experts and ask any questions you may have. Among those joining me will be representatives from the Small Business Administration. Multiple radio stations will be simulcasting this program, and you can also listen online both live and through replay. You can find out additional information here:

https://norman.house.gov/calendar/eventsingle.aspx?EventID=519

🔵 And SIXTH, as always, if you have any problems finding the information you need, I’m here to help. Please call my Rock Hill office at (803) 327-1114 or go online at Norman.House.gov. It’s very difficult to have a conversation through Facebook comments, but if you reach out through phone or my website, I promise we’ll get back to you.