We have friends who own and operate a small business. Very small, truly a “mom & pop” operation that’s been doing business and getting great customer reviews for decades.
They shared some of their frustration attempting to apply for a small piece of that first big “Paycheck Protection Program” support package aimed at keeping businesses afloat. I’ve edited out their names and that of their lender.
Just about everyone has suggested we try and get some of the help being offered for small business’. We had been diligently searching what programs we might fit into and how to fulfill their requirements. We applied for a PPP loan after consulting with our tax preparer, spending many hours assembling the needed documents and filling out the various forms and finally scanning and emailing our bank a 25 page application.
After a few days we get this response.
Aloha,
Thank you for your recent application. After careful consideration, we regret to inform you that we are unable to approve your Paycheck Protection Program application as presented. Attached is our Adverse Action letter which will outline further the reasons why we were not able to process your request.
Thank you
And the attached “Adverse Action Letter” simply said that their application did not meet the bank’s program criteria.
But it offered, invitingly, “if you have any questions, please email us….”
So they did. Here’s the next exchange.
Could you please be more specific as to why we do not meet
program criteria. We met with our tax preparer and spent many hours preparing our application and feel we deserve a more complete explanation as to why we have been turned down. Is our business too small to qualify? Clearly, bigger businesses with smart lawyers have no problem qualifying.
The response was received within a couple of hours.
Aloha,
Due to the high volume of requests we’ve received, we are unable to accept all applications. In addition, the Small Business Administration portal is overloaded and our ability to submit requests is limited. Because of our resources and the SBA’s limitations, we are forced to devote our efforts to process the loans that impact as many of Hawaii’s employees as possible.
Because we are processing current applications, we are unable to devote substantial resources at this time to researching individual PPP situations.
Mahalo!
Obviously very frustrating.
Then they learned about the next round, the Small Business Relief and Recovery Act.
This is a program set up by the city to administer $125,000,000 of federal funds as grants to small businesses on a first come first served basis. $10,000 is the maximum amount any business can receive. Their funding website oneoahu.gov opened last Monday and I submitted an application for
on Tuesday morning. (This time with only ten scanned & emailed pages.) On Friday I got an email from a guy at one of the credit unions administering the grants asking for more documents and urging haste as the money was rapidly running out. He was extremely helpful and after several email exchanges he submitted a claim Saturday morning which will basically cover the two months rent we lost and hopefully keep us up and running a while longer. We’ll keep you posted…. fingers crossed….
And our fingers are crossed for all of us.
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Agreed that is truly frustrating, especially given the fact that millions in PPP loans have now been returned.
Perhaps they’re better off with the $10,000 funding. Additional guidance regarding the PPP has come out several times since applications were first submitted, and now the big “game” is to try to make sure the full-time equivalents is high enough to get complete forgiveness. It really takes a LOT of work to understand the rules, and we’re not even to the application for forgiveness yet.
How many of us see these govmnt sponsored stimuli as slights of hands? Recent read, many loan pkgs have been sold to other banks, so when it comes time to apply for forgiveness, borrower will not know who to beg to.
I know of a few small businesses who applied for and received ppp loans. This program allowed them to keep their employees employed and their business running. I don’t know whos idea this was but it certainly helps.
We got our PPP loan funded in the first round I think because of our accounting firm. We had used mom and pop CPA’s from 1982 until 2017 and there were a lot of times we had to lead them the right way. Then through a subcontractors trade association here in NY we got the names of two construction specific firms. We interviewed both and went with one. What a difference! These guys know our industry, they go to the trade association meetings – they know what’s going on. They weren’t really that much more expensive and got us $24K a year net back in R & D credits and reduced the amount of our receivables that have been billed but not collected that we have to pay tax on – because they know our industry.
They also said during the interview that if we took our corporate statements done by them to a bank or bonding company in our area, that because of their reputation, the statements would be believed. They charged us like $7k to do the PPP applications, then my partner applied to some banks, one bank called him and was sort of blowing him off until he said “Steve from XYZ recommended you to me” then it was like “Oh, Steve….” And we got that loan. I’m so glad we switched accountants.
It’s great that you were able to get a PPP. Please note, however, that the intent was for businesses to obtain relief quickly and without the need to pay for services to obtain it. Under the CARES Act, agents such as CPAs are to be paid by the lenders.
Since the firm charged your business directly, they may potentially be double paid.
Based on anecdotal evidence, I tend to agree that small businesses were not very successful during the first round of PPP funding. During the second round, again anecdotally, it seems that many small businesses have been more successful in getting funded.
Both my wife’s and my business applied for PPP funding and were granted during the second round. My wife had applied during the first round but not awarded until the second round. I did not apply until the second round.
I’m not sure about the anonymous bank referenced in the article, but I found the application process to be pretty straightforward. I would say my wife and I averaged about 2 hours each to apply. This is consistent with our friends who were and were not successful in obtaining funding. “…spending many hours assembling the needed documents and filling out the various forms and finally scanning and emailing our bank a 25 page application” seems incongruous with my experience. Paying a CPA $7k, to apply for PPP, especially if said CPA had prepared past tax returns seems rather excessive.
I didn’t do the application work, my partner did, but the 25 page application and hours of assembling documents is what he described. He put a lot of time into it. We do have 25 employees and got a loan for about $620K.
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