Paycheck Protection Program
If you’re a small business owner, the last bit of hope you had probably was on April 3. That’s the day the SBA started accepting applications for the PPP.
A gift from the gods, the program offered 2.5 times a business’ monthly average payroll in the form of a forgivable loan (i.e. free money if you follow these rules):
- Use at least 75% on payroll
- The other 25% can go to mortgage, rent, utilities
- Don’t cut your staff headcount and wages
- Use it up in 2 months
Two weeks later, $349B (that’s B for billion) the money had dissipated and only 5.7% of businesses received funding.
Who Was It Designed to Help
On its face it seemed it seemed like all the intentions were there to help small businesses. It was a program run by the Small Business Administration and touted by politicians to help the small businesses, the lifeblood of our economy, out there that didn’t have the resources to endure the crisis alone unlike larger businesses.
The fee structure that the SBA would compensate the banks with had the appearances of favoring smaller businesses with smaller loan amounts:
- Five (5) percent for loans of not more than $350,000;
- Three (3) percent for loans of more than $350,000 and less than $2,000,000;
- One (1) percent for loans of at least $2,000,000.
It was declared to be first-come, first-serve giving everybody a chance to get a piece of the recovery pie.
Best Laid Plans of Mice and Men
With the entire country affected by the pandemic, the PPP was destined to be overwhelmed and quickly depleted. The question is, did the money go where it was needed most and was it done “fairly”?