BD meets PPP

Dear friends,

There has been a lot of news lately about the Cares Act and the Paycheck Protection Program (PPP) designed to help small businesses retain their employees during the pandemic. Like many other non-profits, we applied for these funds. And like many others, we were not funded in the first round.

We’re writing to share what the process has been like for us so far. This seems important since the PPP involves public funds. We’re a non-profit, partnering with and representing the public in our mission. There’s a lot we don’t understand, but transparency about our experience is something we can contribute.

We don’t mean for the timeline below to blame or criticize anyone—it’s just what happened. And we’re still hopeful. We have been assured by our bank (Citizen’s) that we will be considered for a second round of funding, which was passed by Congress last week. But we can’t deny that this has been a frustrating experience for us.

Here what has happened:

Wed. Mar 27
President Trump signed into law a $2 trillion stimulus package that included $349 billion in forgivable SBA payroll loans to be made available to small businesses with 500 employees or less. In an historic move, nonprofits were also eligible for these loans.

Sun. Mar 29
Rebecca attended her first webinar (not the last!) to learn more about the requirements. She learned that funds would be distributed through the banks on a “first-come-first-served” basis. She was encouraged to apply through the bank where we did business (Citizen’s) since those with established relationships would be given priority. We began preparing a list of the documents we thought might be required so we would be ready.

Mon. Mar 30
Keith called our small business banker at Citizen’s. He said we were only the sixth business to inquire. A good sign. We were told we could obtain “priority status,” which would meant we would be contacted as soon as Citizen’s applications became available. Rebecca immediately applied for, and received, priority status.

Thurs. Apr 2
We learned that the national program would be opening the following day, on April 3rd. We started to feel nervous since we had not heard from Citizen’s about when their application would become available.

In the afternoon, we received an email from Citizen’s explaining that their application would be handled electronically and would open on Monday, April 6. This was a sternly-worded email. We were reminded of Citizen’s status as an SBA lender, warned against using non-SBA lenders, warned strongly against paper applications, and told that Citizen’s could not intervene on our behalf if we applied elsewhere.

Fri. Apr 3
Citizen’s sent another email that included a new list of required documents that they might be requiring on Monday. Keith began gathering these documents.

This same day the RI Foundation notified us about an opportunity to work closely with a consultant to help us navigate the process. Our consultant was available for a Zoom call so Rebecca had her first meeting. Our consultant helped us calculate the appropriate amount to ask for ($45,200)

Mon. Apr 6
2:53 PM: We were alerted that the application was about to become available. Rebecca waited expectantly for it to arrive.

7:41PM: We received the application. Rebecca immediately tried to apply, but the portal was non-functional. She informed our bank.

Tues. Apr 7
Rebecca spent all day trying to open and submit the application. Sometimes the website booted her off. Sometimes it would freeze. Most times she got a message saying the portal was “under maintenance.” She started taking screen shots of the semi-completed application to speed up her next attempt.

Rebecca noticed that sometimes when the application opened the questions had changed—this implied that either nobody was successfully submitting, or the application was not really active, or different information was being required of different applicants depending on when they applied.

Rebecca called our banker at Citizen’s to alert him to the problems she was having. He reassured her that there was still plenty of money left and encouraged her to keep trying.

At 7:30pm she nearly completed the application but saw a new question asking for the following information:

"Average monthly federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee's and employer's share of FICA and Railroad Retirement Act taxes and income taxes required to be withheld from employees."

She didn’t understand the question, so rather than give a wrong answer she sent an email to our consultant for clarification.

Wed. Apr 8
Rebecca heard back from the consultant that the confusing question was not valid. The guidelines had been changed. The consultant advised us to leave that section blank.

Around 2pm Rebecca finally submitted the completed application. Hooray!

Thurs. Apr 9
We received an email from Citizen’s acknowledging receipt and congratulating us for successfully submitting our application.

Mon. Apr 13 - 16
Rebecca was concerned because she had not heard anything further from Citizen’s. She was about to call our banker when she received an email assuring her that our application had been received and was being processed. She received the same email three days in a row.

Thurs. Apr 18
We read the news that the $349 billion emergency fund had run out.

Fri. Apr 19
Rebecca repeatedly called our banker and left multiple messages.

Sat. Apr 20
3:41pm Rebecca received this notice:

“Due to the overwhelming demand for relief amid the COVID-19 pandemic, the Small Business Administration (SBA) Paycheck Protection Program (PPP) exhausted its $350 billion supply of stimulus funding sooner than it had expected. Despite our efforts, working continuously since the program was announced, not all of our customers were able to secure funding. Many banks and small businesses across the country had a similar experience. Thus, disappointingly, your application for Beautiful Day has not been funded by the SBA.”

We’ll be honest: this was a frustrating experience. While the actual application took about 15 minutes and required almost no paperwork, the amount of time we invested was pretty astounding. We recognize that the PPP was a rapid response to a crisis, so we were prepared for plenty of confusion and problems. We are used to dealing with confusion and problems! But we were surprised by how thorny this process was. If you applied, we have comments open below in case you want to share something about how it went for you.

Clearly, our experience wasn’t unique. It looks like the banks issued loans for only about 5% of America’s small businesses. And the process has been fraught with controversy. We have all been reading about class action lawsuits by small business owners who claim that some of the larger banks gave priority to large corporations. We have all heard about huge, publicly traded corporations coming away with tens of millions of dollars while small mom-and-pop businesses received nothing. Perhaps the increased public scrutiny will mean that the next round of funding will find its mark and help more of the small businesses it was intended for.

We certainly remain hopeful. A successful loan request could have a significant bearing on our future so we will keep trying. We have been informed by Citizen’s Bank that we are “in the queue” for this next round of funding and can only wait and see what happens.

We’ll let you know!

Written by Keith Cooper

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