The $349 billion Paycheck Protection Program (PPP) is intended to help small businesses weather the coronavirus pandemic, but many business owners are having trouble getting the federal money.
The PPP was established by the CARES Act and is implemented by the Small Business Administration (SBA) with support from the Department of the Treasury. The program provides small businesses (500 people or fewer) with funds to pay up eight weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent and utilities.
Because the loans are first come first served, some are worried the money will run out before their applications are approved and many people haven't even been able to apply for the funds.
Sal Schroeder, the owner of My Gal Sal Bakery in Phoenix, said she was forced to close her store because she couldn't get a PPP loan. "It's frustrating because I really feel like government and the banks have failed us small businesses," said Schroeder.
She went to her long-time bank Wells Fargo to apply for the PPP. Wells Fargo told her the bank had reached capacity and wouldn't accept more requests. She was told to try other banks, but at this point, most banks are only taking applications from existing customers due to fraud concern.
"I'm a business that's going to be around, you would think I would be candidate to be taken care of during this time. But absolutely nothing's going on," she said. "And now I'm in a situation where everything is so uncertain and so unsure, I don't know if I’m going to be around for a long time. I worry about my employees."
Chartered Financial Analyst Scott Roelofs, owner of RCG Evaluation and Monetization in Scottsdale, recommended small business owners keep checking with SBA-approved lenders.
"You have to keep trying. The easiest thing for congress to do is allocate big money to people but then you need team of people who can execute and do underwriting," he said.
Roelofs said things will continue to change and be updated, so even if you don't qualify now or can't get through, you could get help later.
"We have to understand that the SBA is used to doing $75 million in loans, during a hurricane they'll ramp up to $400 million and now they're being asked to do $500 billion. Everyone's behind," said Roelofs.
For businesses like My Gal Sal Bakery, that money could be the difference between closing temporarily and for good. "I feel like I'm on an island and I don't know if I’m coming or going. We are slipping through the cracks of a system that was not built to look after us as small businesses," said Schroeder.
The Chandler Chamber of Commerce, along with other chambers, has weekly webinars with SBA representatives where businesses owners can ask questions. You can register to join the Zoom webinar on April 16 at 10am.
The US Chamber of Commerce has this PPP load guide and checklist.
The CARES Act also created an Economic Injury Disaster Loan (EIDL) with an advance of up to $10,000 that doesn't have to be repaid. The EIDL loans first claimed the upper limit per company would be $2 million, but due to high demand, the loans will ration to $15,000 per applicant, according to the US Chamber of Commerce.
Chris Camacho, the president and CEO of the Greater Phoenix Economic Council, said Monday that more money is needed to help small businesses.
"More money needs to be appropriated as the demand is significantly higher than the amount the SBA is offering currently," said Chris Camacho, President & CEO at the Greater Phoenix Economic Council.
"We need Congress to act on the next stimulus to help small businesses as the sector is frustrated that the original guidance was set with much higher caps."