(Chicago)

Small cap prices usually expand and contract more quickly than large caps do. This happens both in downturns and upswings. However, in this coronavirus rally, that has not held up, as small caps are faltering while their larger peers soar. For instance, the Russell 2000 is trailing the Russell 1000 so far this year. “This latest rally is very much a capitalization story — the big players were the ones that held their own”, says SEI investments. Another portfolio manager added “The secular growth force that comes from mega-cap tech stocks doesn’t appear to be replicable in the rest of the market”.

FINSUM: Small caps tend to lack the scale that would allow them to thrive even as the economy falls, which means there haven’t been as many winners as there were in large caps.

As of 10:30 AM Eastern this morning, the PPP Program re-opened for applications from this “bucket” of $310 Billion, as the first bucket of $349 Billion rapidly was depleted.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY

Has demand waned? On the contrary:

Not even 10 minutes after a government relief loan program for small businesses relaunched on Monday, lenders reported that the U.S. Small Business Administration system was overwhelmed and inaccessible with a flood of applications.
Lenders from across the country were saying they couldn’t get into the SBA’s system when the Paycheck Protection Program relaunched at 10:30 a.m. New York Time, said Paul Merski of the Independent Community Bankers of America. The system was down as early as 10:34 a.m. in New York, according to a person familiar with the matter.

Which is why we even put out a press release this morning demanding an additional $400 Billion rapidly be allocated to the program so the overall funding exceeds $1 Trillion.

The Federal government seems to imply that the $310B number was sufficient because that’s about how many applications were stranded that couldn’t get funded in the first round – about 1 million.

Here’s the thing, however, that’s not the true number. Based on our survey data and our estimation, over 4 million applications were not completed based on a variety of factors – including glitches on the SBA’s site, problems with the lenders, etc.

Which means even this next $310 Billion won’t be enough and why we called for at least an additional $400 Billion – with rules for disbursement that will make sure TRULY small businesses benefit, and not just large companies masquerading as small ones. Read more here, and if you haven’t yet, be sure to submit an application.

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand where PPP and EIDL money is flowing. We are empowering the business community and journalists with the data they need to keep the government accountable.

APPLY FOR PPP WITH COVID LOAN TRACKER

So much of the focus of the media covering the Paycheck Protection program has been about the awful pace and communication about application processes and approvals. However, what has been less covered is just how difficult the application process itself is. At COVID Loan Tracker, we have gotten a rare insight into the difficulties everyday small business owners are having with the application process because of the thousands of emails we are getting from CLT community members.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY

Those general struggles are a story for a separate article, but today we want to focus on the challenges the application process poses for immigrants and those for whom English is a second language. IRS forms in particular, which are a crucial and obligatory part of the application for every lender, are made for professional accountants, not genuine small business owners. Terms and terminology are difficult even if you are a native English speaker. If you are not one, they are nearly impossible.

The IRS does offer forms in a few languages, but not all lenders are equipped to process such forms with an expediency, which means the default language is inevitably English. Amplifying this issue is the fact that immigrants become entrepreneurs and small business owners at almost 4x the rate of native born Americans*. This means that per capita, immigrants are much more likely to deal with PPP applications issues than native-born Americans. Furthermore, the types of business that immigrants own**—gas stations, drycleaners, nail salons, hotels & motels, and specialty food stores—have been particularly hard hit by the shutdown. Therefore, in many ways the Paycheck Program excludes immigrants almost by design, and resultantly, the COVID-19 lockdown poses a much larger threat to the livelihood of immigrants than it does to native-born Americans.

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand where PPP and EIDL money is flowing. We are empowering the business community and journalists with the data they need to keep the government accountable.

Apply for PPP with COVID Loan Tracker

*https://immigrationforum.org/article/immigrants-as-economic-contributors-immigrant-entrepreneurs/
** https://immigrationforum.org/article/immigrants-as-economic-contributors-immigrant-entrepreneurs/

As most small business owners already know, the Paycheck Protection Program has been nothing short of a debacle. According to COVID Loan Tracker, still only around 10% of those who applied for PPP have received their money. As this new round of PPP funding arrives on Monday, COVID Loan Tracker has launched a partnership with Fundera to help small business owners apply for PPP.

Generally speaking, it is a very good idea to work with online lending platforms like Fundera, Lendio, and those similar. Their model for processing PPPs has proven quite successful, and we can see it in our data. See why below.

Apply for PPP with COVID Loan Tracker

After vetting several partners, here is why COVID Loan Tracker decided to work with Fundera:

1. Faster and more successful: we can see in our data that online platforms like Fundera had the highest success rates. Your application is offered to many lenders, and placed to one that is ready to process them, so you have better odds of success and faster processing times.
2. Transparency and Communication: PPP applicants will receive updates on a regular basis—this is the most transparent PPP application available.
3. Reputable and vetted: Fundera has good reviews and our founders (Duncan+Rita) personally spoke with their CEO and CTO for due diligence.
4. Pre-applications: you can fill out the application now to have it ready once PPP gets more funding.

Apply for PPP with COVID Loan Tracker

One of the key challenges small businesses have faced in this process is not having all the documentation needed to process the PPP application. In fact, CovidLoanTracker.com sees it here through their PPP application: so far only about 50% of businesses who begin the application process actually complete it.

The number one reason for this? They don’t have everything they need.

CNBC has reported the same issue:

“A lack of preparation is one of the most common mistakes that owners made when applying for PPP loans during the first round, says Rob Scott, Great Lakes regional administrator for the SBA.”

So, what exactly do you need to have ready? Here’s a helpful checklist, but let’s break-it-down and try to keep it simple:

• Driver’s license: front & back photos/scans for every person who owns 20% of more of the company

• All the company formation documents you can get hold of: certificate of registration, any operating agreements, anything that gets to how the company was formed and is structured legally

• Tax returns: at least two if not three years of tax returns beginning most importantly with the 2019 return

• Payroll is the and most important trickiest part. So here’s what you should try to get from your payroll service provider:

The last twelve full months of payroll, and then calculate the “average monthly” payroll from that. BUT - some banks are actually asking for that monthly average to be calculated from the calendar year 2019. Our advice? Do both! Have as much ready as possible.

IMPORTANT: what are payroll costs? some small business owners are confused. It’s everything, INCLUDING 401(k) and health insurance contributions (including employer contributions). Quite simply: salary, wage, commission and tips, vacation, medical, parental and sick pay. It ALSO includes payment for group healthcare benefits, including insurance premiums paid. All costs in there. Even payroll taxes!

Mortgage, rent, utility documents, etc: your big ongoing expenses

Proof your business is in good standing

Proof the COVID-19 pandemic has negatively impacted your business

Finally, and often overlooked, check your business credit file and make sure it’s up to date and correct. About 25% of companies have found their business credit files are inaccurate, A good place to check is through Nav.

Preparation is most of the battle - and having all your documents in order and ready-to-go will help you nail the PPP application process.

Let us know how your process goes or if we missed important items that you discover you needed.