Displaying items by tag: PPP loans

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.

All the buzz in the small business world today is about Congress’ new PPP funding package. The $484 bn deal gives $310 bn to helping small businesses as part of a continuation of the Paycheck Protection Program. It also sets aside some of that money to be processed specifically through small banks.

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when PPP and EIDL advance money starts flowing. The site works by crowdsourcing knowledge on applications and loan disbursements. Our goal is to help the small business community and empower journalists with the data they need to keep the government accountable.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE FORM

While the deal may be a sigh of relief to small business owners waiting for money, it does not go nearly far enough. Firstly, on the positive side, it does give billions of Dollars to be processed through small banks, which clearly did a great job the first time around. COVID Loan Tracker’s stats show that 82% of all successful PPP money was processed by small banks.

However, the new program does not allocate money specifically to companies of a certain size, which means the free-for-all of “first come first serve” will continue to disadvantage small companies. Bigger small businesses (up to 500 employees) have extensive accounting staff and sterling paperwork, which means they will once again be able to submit applications much more quickly than genuine small businesses. The program needed to have a feature which made sure “X” Dollars were allocated to genuinely small business, such as those under 25 people.

So, yet again it looks very much like the PPP won’t help the small businesses that need it most.

Treasury Secretary Mnuchin thinks $310 bn towards a new Paycheck Protection Program will be enough to satisfy remaining demand. We at COVID Loan Tracker think he is sorely mistaken.

The government and the SBA in particular have continually mentioned a figure of around 1 million applications that were in-process but stranded by the first round of the program running out of money. Based on that calculation, the logic for the size of the new program is very simple: if $349 bn funded 1.7 million applications in the first round, then surely $310 bn will fund the remaining 1 million applications that got stranded.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE FORM

Unfortunately, this assumption grossly underestimates the real number of stranded applications because it does not account for “shadow applications”. Many small business owners never had their applications formally submitted to the SBA for an E-Tran number because they were still collecting/correcting/submitting paperwork that was requested by their lenders. Many applicants did submit all paperwork, but because of faulty systems, their applications were never submitted. Both founders of COVID Loan Tracker had this happen to them on multiple application platforms despite applying the first day, and thousands of small businesses have shared similar stories with us.
Because of this,

COVID Loan Tracker believes there are closer to 5m stranded applications—mostly from genuine small business owners who lacked accountants and did not have perfect paperwork at-the-ready. Even counting shadow applications, there are also small business owners who simply did not apply because the money ran out so soon—meaning even more applications are forthcoming. Accordingly, we believe demand for the new round of PPP will be extremely high and that funds will be exhausted in 7-10 days.

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when PPP and EIDL advance money starts flowing. The site works by crowdsourcing knowledge on applications and loan disbursements. Our goal is to help the small business community and empower journalists with the data they need to keep the government accountable.

If you have been confused about the exhaustion of the Paycheck Protection Program in the context of hearing so many stories that people have not received money, you are not alone. There has been a huge public outcry about the program. It is not just that so many big companies got the money, it is that so FEW others did. Less than 7% of businesses got approval.

At COVID Loan Tracker, we have been watching actual loan disbursements, not just approvals, by relying on fellow small business owners. The results have been stark. Thus far, only 8.1% of business report receiving any money. 28% say that they have received “approval” but have not gotten money yet. COVID Loan Tracker has had around 20,000 company submissions that track around $7 bn in PPP applications. See full stats here.

Here are the stats as of 6 am this morning (4/21/20):

PPP application approval rate: 28%
Percent of PPP applications actually received money: 8.1%
Median successful PPP application: 120,000
Median employees: 15

Percent of EIDL advance applications received money: 8.0%
Median money received: $5,000
Median employees: 5

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when PPP and EIDL advance money starts flowing. The site works by crowdsourcing knowledge on applications and loan disbursements. Our goal is to help the small business community and empower journalists with the data they need to keep the government accountable.