FILE – In this Thursday, April 2, 2020 file photo, Jovita Carranza, administrator of the Small … [+]
Like many small business owners who have seen their plans derailed and employees laid off during this unprecedented crisis, I was heartened, and, frankly, a little surprised, at the scale of the announced interventions by the government with the signing of the CARES Act on March 27. As news of the most important program for small business, the Paycheck Protection Program, seeped out, it seemed like a godsend for businesses who hoped to keep their staffs together to weather at least a portion of the storm.
I read everything I could about how to prepare and apply for the program, which was to begin taking applications on Friday, April 4. I attended several webinars that outlined the elements of the program and trumpeted the simplicity of it. I even wrote in Forbes about how easy it was to apply for the disaster relief loan.
Then reality set in. My first clue should have come when I asked for a list of SBA approved lenders who would be participating in the PPP program. No one seemed to have an actual vetted list. The SBA told me that there was a list of existing lenders for standard SBA loans, but not all would be participating in the program.
I wasn’t too worried. My company does its business banking with Merrill Lynch. Merrill is owned by Bank of America. And I had been assured that Bank of America would be participating in the program. I have been a Merrill Lynch client since 1989 when I started one of my first businesses. I was sure that Merrill would take care of their own through their parent company.
I was wrong. Like many small businesses, my banking had been done on the personal, not commercial side of the house. When Bank of America announced support for the PPP program, it declared its intention to only offer assistance to those customers that already had a commercial loan product. No problem, I thought. I’ll just open a commercial account. But, no. The account had to be active by February 15, 2020. Many of the other large commercial banks announced a similar program with the same cutoff date.
Senator Marco Rubio expressed the sentiments of many in the small business community:
Though the PPP program has been touted as a way to save small business, the reality for the big banks is that the program is being treated as an award for its best clients. Hardly the PR message the CARES act was designed to send.
So, like thousands of other small businesses hoping to keep its staff on the payroll, I was sent scrambling to the list of other banks. What should have been a financial Thanksgiving became instead Black Friday, with entrepreneurs scrambling to get a scrap of the PPP program. It has been utter chaos.
To be fair, these are unprecedented times for the government, as well as for businesses and their employees. But the certainty with which politicians have promoted the PPP program has been profoundly misleading. We’ll see whether the program achieves the goal of providing financial assistance for small businesses who hope to keep their business ongoing to weather the storm. With a Republican-led government, I think most small businesses have assumed they would simply be on their own to cut staff and hunker down, despite Rubio’s claims.
Like thousands of other small business people, I continue to apply for the program through any bank I can find. Forbes and other publications have done a great job of passing on information as it becomes available.
Forbes author Ryan Guina has summed up where we are with the program: “Unfortunately, the program was rushed through the implementation process and was pushed live before banks had the ability to create stable processes for accepting and funding these loan applications.”
The United States has a long history of creating successful government programs
Like the haphazard nature of dealing with the Coronavirus pandemic itself, it didn’t have to be this way. The United States has a long history of creating successful government programs, from Social Security to the G.I. Bill to Medicare—that work as promised. Let’s hope that the Paycheck Protection Program ends up being one of those successful programs, and not an exercise in futility by an uncaring federal government.