PPP Second Draw Update
Here are the results for the PPP loans so far in 2021 through February 15:
- 1,804,910 loans approved
- $133,500,000,000 for those approved loans
- $73,966 average loan size
So, halfway through, a little less than half the allocated $285 Billion has funded. Is this good news or bad news? It depends. It’s good news because that would suggest the money will last until March 31. It’s bad news because the delay is being caused by a fraud-stifling bottleneck. With the applications and funding pushed back, the money may race out in March as the applications make it through the bottleneck.
DELAYS - part of the process is the exceptional delays. There are two major reasons:
1) The SBA has put in a number of fraud triggers and checks and balances to minimize fraud. This has had the desired effect on reducing fraud but with expectations set in 2020 as to the speed of funding, borrowers are expecting to be funded in 7 to 10 days. That is not happening for as many as 30% of borrowers; many applications are taking 4 weeks or more.
2) The Lenders
a. More automation on the part of the lender. Almost all applications are uploaded and all communication is via email.
b. The Fintechs are absolutely inundated, more so than last time. Many who did a fine job in 2020, have found themselves struggling to even respond to borrowers, even after four weeks.
c. The major banks seem to be handling this better than in 2020, but even when you can talk to someone, the person you reach almost has no influence on your application. This varies from bank to bank.
What You Can Do – The other part of the delay is the data entry by the borrowers. With almost all lenders pointing borrowers to a portal, there is no hands-on help from the banks, and the FinTech’s never had it to begin with and the chatbots can only do so much.
1) If you are going to do this on your own, read the lender’s directions. If you read the directions and follow them, your problems will be minimal. Do NOT throw all the documents you have at the lender; the only message you will get back is: “Please provide documentation to support the requested amount”. What it won’t say is “Gee, we looked at what you provided, and we think you should get $xxx,xxx.xx and this is what we need to document that.” There are no counteroffers, folks. You will go crazy guessing what your amount will be unless you can link it to your documents.
2) If this is your second draw, look at what was submitted the first time. Odds are pretty good it will be the same. However, in some circumstances, that won’t work either.
3) Just use your 2019 or 2020 941s and the state unemployment insurance number in the DE 9 to tabulate your PPP loan. It is by far the easiest to calculate and document. Yes, you may lose a small percentage of the loan you should have gotten by including benefits and retirement costs, but you will have the money while many others will be busy guessing how to match the loan amount with the documents submitted, particularly if you are including health insurance invoices, 401k contributions and K-1s.
On a Lighter Note…treat yourself and maybe someone else.
On March 4, from 9 to 9:45 a.m., the TEAM Referral Network will be hosting “Lessons on Leadership from Jerry Rollins”. Jerry was a professional hockey player who grew up in a hockey family. His father is Al Rollins, NHL player and professional coach. As a young man, he was surrounded by the greats: Gordie Howe, Bobby Hull and Wayne Gretzky. He was lucky enough to learn a lot from them about life, sportsmanship and excellence. What is remarkable is the fact that Jerry is a high school dropout who took everything he learned on and off the ice and became a successful CEO, running five companies and now mentoring hundreds of executives. In his words, “I clawed my way to the top, not by being the best, but by observing and mimicking those who did possess extraordinary talent. Business is a process and once you understand it, success is almost inevitable.”
There is no cost, but we are asking for attendees to go to the Cedar House Website to make a donation of any size to help Cedar House, a non-profit that has helped hundreds of families get their lives back from the trap of drug and alcohol addiction. Believe me, your money could not go to a more deserving organization.
