Displaying items by tag: small business

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.

One of the big questions in the small business world right now is “where is my PPP loan”. The SBA announced last week that the program had run out of money. Yet, the large majority of small business report that they have not received funds, even those that have been “approved”.

COVID Loan Tracker was founded for exactly this purpose—to find out when money from the PPP program actually starts flowing. The SBA says around 1.7m loans were approved, accounting for only 6.6% of the 30,000,000 small businesses in the country. Yet of the $349 bn “approved”, only about 7% of companies say they have received any funds.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE FORM

As of 7:00 am this morning here is our data on actual disbursements:

Total Applied: 13,428 companies
Total received money: 941 companies
Percent receiving money: 6.97%
Total Dollars received: $320,000,000
Median Employees per successful applicant: 15
Median Loan size: $320,000
Median Length to receive loan: 9 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.

HELP US KEEP THE DATA FLOWING

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand when and where 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.

Retail is one of the largest sectors of the US economy. Tens of millions of workers earn their living in the sector and millions of small business owners employ them. However, this group—at once the most visible and vulnerable victims of the lockdown—are being left out in the cold by the PPP initiative. It has already been well established that “large” small businesses have fared much better in the Paycheck Protection Program, but retail small business owners may have even more to lose.

The common practice in commercial leasing to small businesses in the US is that landlords require tenants to put up personal guarantees in order to execute a lease. That means that if a business is unable to afford the rent, their own personal assets are the on hook to pay the landlord. Small business owners usually have no choice but to accept the terms—if they do not, they cannot lease the space. Since almost all landlords require this, small business owners are left with a stark choice: commit to a personal guarantee, or don’t open a business.

While it is clear at this point that smaller small business owners have not been helped by this program, that is doubly true for retail owners, for whom payroll is usually a minority expense compared to rent, utilities, and inventory. Accordingly, the small shop owners of America—hardware stores, clothing boutiques, nail salons, dry cleaners, cobblers, bar owners etc are at grave risk of losing not just their business, but their own assets, such as savings, houses, future income. They stand to lose everything.

This is likely to be the hardest weekend ever for millions of small business owners around the country. The SBA ran out of money on Thursday after just 1.6 million business had loans been “approved”—the vast majority of which have not been paid, according to COVID Loan Tracker. There are 30 million small businesses in this country. Even discounting for shell companies, that means tens of millions of small businesses got nothing from the program and are now facing doom. Forbes estimates the program only funded 5% of small businesses in the country.

PLEASE HELP SMALL BUSINESSES BY FILLING OUT OUT THE COVID LOAN TRACKER SURVEY.

Congress needs to urgently refund the program to help these businesses, but it is also worth noting that there were vast discrepancies in those who received PPP money. “Those who had pre-existing credit relationships with banks did much better”, says Duncan MacDonald-Korth, cofounder of COVID Loan Tracker. “And ‘big’ small businesses are much more likely to have those credit relationships”, he continued. Accordingly, COVID Loan Tracker found that over 81% of those who received PPP had pre-existing lending relationships with small banks! That means the millions of small businesses who fund themselves by making more money than they spend were boxed out of this program.

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.