A look into the SBA’s Paycheck Protection Program


The coronavirus pandemic, also known as COVID-19, has been an exercise in dealing with uncertainty. Faced with mounting operating expenses and coupled with stagnate or even declining revenues, many small business owners and entrepreneurs turned to their trusted banking partner to apply for Federal assistance under the U.S. Small Business Administration (SBA) Paycheck Protection Program. In less than two weeks PPP funding was exhausted. Through April 16th, the SBA reported that it had approved approximately 1.7 million loans via 4,975 different lenders totaling $342 billion in aid. The average loan size was $206,000, with the vast majority of loans totaling $150,000 or less.

The construction sector received 13.1% of PPP funds, as of the allocation date. Professional, scientific and technical services sector received 12.6% and the manufacturing sector received 12.0% of PPP funds. From a geography perspective, businesses in the Southeast region received 28.7% of PPP funds, as of the allocation date. Meanwhile, the Midwest and West regions received 25.5% and 20.6%, respectively.

Late in the evening on April 21st, the Senate passed legislation calling for another $484 billion in relief funds, of which, $310 billion is earmarked to support another round of the Payroll Protection Program. There is no doubt this additional stimulus is a welcomed development for the many small and medium-sized business that were shut out of the initial allocation. There was an overwhelming rush to get in line for the initial PPP program as businesses sought to secure a much-needed lifeline in the face of the business equivalent to rapid climate change. This race for liquidity was and continues to be completely justified, but what businesses need to be mindful of is having a plan beyond the receipt of these funds.

This program, despite being developed and implemented in an unprecedented fashion, continues to evolve and is subject to much ambiguity. It is important to note that the SBA has not yet rolled out its formal guidance on the program’s loan forgiveness, which, in turn, is putting many participants in a “wait and see” mode as they try to anticipate the future. The point here is simply this – approach this program with the understanding that it can be a vital resource, but also as a situation where all the fine print has yet to be established.

For any entrepreneurs and small business owners interested in evaluating this next round of PPP funds, or if you would like help developing a financial plan in light of these rapidly changing times, please do not hesitate to reach out and start a conversation. We would be happy to share our experiences with you and help you prepare for an uncertain future.