2020 05 28 A26875 D221227 Nfib Small Business Perpectives On Ppp

Summary

Briefing materials on PPP loans prepared for the Senate Financial Institutions, Economic Development & Trade Committee, dated May 28, 2020, with contact details for the NFIB Washington State Director. The materials describe the loan application process that opened April 3 and report that banks charged more than $10 billion in processing fees and that 424 publicly traded companies received $1.35 billion in PPP loans. Citing the SBA, they state that $12 billion in PPP loans had been disbursed to 91,707 Washington businesses, averaging $130,945 per loan. They list survey percentages on loan receipt, forgiveness expectations and workforce rehiring. The document closes with written accounts from Washington small-business owners about applying for and spending PPP loans.

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Senate Financial Institutions, Economic Development & Trade Committee
May 28, 2020
▪   “First come, first served” loan application process opened April 3;
    independent contractors and other self-employed small business
    owners not allowed to apply until April 10
▪   Largest banks provided “concierge service” to private banking and
    large commercial customers; some added hurdles for smaller clients

    “Bank of America has been our bank since 2005. We run millions of sales, credit cards, etc.
    through B of A. They said we and ANY business that does not have a corporate credit card
    does not qualify. This seems crazy, unfair. We actually have personal Bank of America credit
    cards, but they have to be corporate cards. ALL our business and payroll goes through this
    bank.” (Woodinville firm with 12 employees)

    “At [JP Morgan] Chase, the nation’s largest bank, nearly all private and commercial banking
    clients who applied for a small-business loan got one, whereas only one out of every 15 retail
    banking customers who sought loans was successful.” (New York Times, April 22, 2020)
▪   Banks charged more than $10 billion in processing fees
▪   424 publicly traded companies
    received $1.35 billion in PPP loans
▪   More than 80 percent declined to
    return the money despite public outcry
▪   Among those returning funds are:
    o Ruth’s Chris steakhouses – $20
      million
    o Shake Shack – $10 million
    o Potbelly – $10 million
    o Los Angeles Lakers (privately held)
      – $4.6 million
$12 billion in PPP loans have been disbursed to
91,707 Washington businesses
Averaging $130,945 per loan




(Source: SBA, May 23, 2020)
▪   80% of small businesses have applied for a PPP loan
    o   90% of those have already received funds
    o   90% have already begun using PPP funds


Of those who have note yet received funds,
▪   71% have NOT received confirmation whether loan was approved
▪   29% have received approval confirmation
▪   72% say PPP terms and conditions are somewhat or very difficult to
    understand
▪   55% report no difficulty spending entire loan amount during eight-
    week forgiveness period
▪   63% say spending three-quarters of loan on payroll costs will not be
    difficult
▪   53% expect little difficulty getting workforce headcount back to pre-
    crisis level, although almost half have some concerns:
    o   28% somewhat difficult
    o   19% very difficult
▪   51% will expend all loan proceeds during eight-week forgiveness period
▪   27% plan to keep any remaining funds to use as a loan
▪   22% expect to return any unused loan proceeds left after eight-weeks


▪   54% expect their entire loan to be forgiven
▪   27% expect at least three-quarters of their loan will be forgiven
▪   11% don’t know whether their loan will be forgiven


▪   73% have maintained workforce or rehired workers specifically to
    maximize PPP loan forgiveness
Jeff Chambers, Owner         Bob Lycke, President
Visiting Angels              KR Inc.
Tacoma                       Mountlake Terrace


Lois Cook, Managing Member   Mark Peterson, Owner
America’s Phone Guys         H&H Furniture
Vancouver                    Yakima


Jim Dixson, Owner
Friendly Computers
Spokane Valley
It's possible that we may be having a good experience with the program.
Our banker was very instrumental in getting our application processed and
approved. We did receive the entire loan amount requested.
Here's what we don't know: How much of our loan will qualify for forgiveness
is still the great unknown. We are receiving updates as soon as they are made
available from my banker and our CPA.
We're keeping our fingers crossed.


--Paul Agather, Executive Vice President, Parts Wholesalers Inc., Spokane
I received a PPPL on May 5th after the second round of funding.
I inquired through my bank when the initial funding was provided, but US Bank would only work with single-
owner businesses at that time. They accepted my application materials … the day funding was exhausted.
Once additional funding was available, US Bank started working with two-owner businesses, which we are,
and eventually [we were] successful.
We have self-funded [paying] all our employees. They are doing maintenance work, since sales are down
80%.
We normally pay employees a combination of piece rate and hourly. The first week of the shutdown, they
received 40 hours of hourly pay and were shocked at the reduced pay compared to normal.
I didn’t know how long the pandemic would last and didn’t want to lose workers to unemployment (too
much benefit) or other work, so changed their hourly pay to the average they received since July 2019 to
present. That is a high payrate for maintenance work, but nobody quit, and they are all available when sales
increase.
Now that we have the PPP loan, there are certain pay requirements to maintain for forgiveness.
Sales are starting to return, but employees are less productive on hourly pay compared with piece-
rate pay.
We are closely monitoring that and may change to piece rate if it doesn’t end up reducing their pay.
My concern is: one week may be great, and the next week poor, so how does that affect my
forgiveness? I just received the forgiveness application documents and am studying those to make sure we
don’t run into problems.
--Small-business owner, Olympic Peninsula
We own two full-service restaurants with around 100 full- and part-time employees.
We reviewed the [federal] legislation to be ready to apply as soon as the PPP loans were available. Our goal
was to apply early, but delay using the funds until closer to an opening date.
We intended to maximize loan forgiveness by re-employing the entire staff, returning them to work from
unemployment as soon as possible. Nothing good comes from a closed restaurant – lost employees,
customers, re-training costs, etc.
We received our SBA number for the PPP loan. After the fact, SBA guidance said funding must take
place within 10 days of receiving the SBA#, and the 56-day window started the day funds were received.
This left a very short window to devise a plan to begin using funds. We analyzed historical hours, wages, and
tips (Dec 1 – Feb 29). We sent letters to all employees and held staff meetings to explain our plan to rehire
the entire staff.
We then started takeout operations – with a full payroll – four days into the [eight-week] 56-day window.
Overhead was a nightmare with this 56-day window vs. our normal semi-monthly payroll. We had to use
separate payroll codes for regular hours, wages, and tips for normal pay-period hours worked, and for PPP
hours, wages, and tips.
Today, the restaurants are still closed. We are providing takeout, but our volume is only about 15%-
20% of our normal business.
We expect PPP funds to run out by June 10th, but our re-opening date is still unknown.
(continues …)
(continued …)
There is chatter about Congress making changes to the program, but extending the timeframe to spend the
funds from eight weeks to 24 only helps businesses who have not spent funds. It doesn’t help business
owners like me who followed the intent of the law.
The program should not only help employees by keeping them on payroll, but help restaurants stay
in business so they can keep workers employed long-term.
Right now, we are faced with significant layoffs come June 10th – plus the resulting unemployment rate
increases for years to come.
Because we had our act together and applied early, we are in a much worse position than someone who
didn’t, as well as those who did not spend PPP funds and are now looking at a potential extension of time to
do so.
--JD, Restauranteur, northwest Washington
For more information, contact NFIB Washington State Director Patrick Connor at
(360) 786-8675, or by email to Patrick.Connor@NFIB.org.


NFIB Research Center’s press release and a link to the full survey can be found at
nfib.com/content/press-release/economy/71105/.


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