The roll-out of the paycheck protection program was utter chaos
Like many small business owners who saw their plans derailed and employees laid off during this unprecedented crisis, I was comforted, and frankly a little surprised, at the scale of the interventions announced by the government with the signing of CARES Law March 27. As news from the most important program for small businesses, the Paycheque Protection Program, has infiltrated, it seemed like a boon to companies hoping to keep their staff together to weather at least part of the storm.
I read everything I could about how to prepare and apply for the program, which was due to start receiving applications on Friday April 4th. I even wrote in Forbes on 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 participate in the P3 program. No one seemed to have a real verified list. The SBA told me that there is a list of existing lenders for standard SBA loans, but not all of them will participate in the program.
I wasn’t too worried. My business does its banking with Merrill Lynch. Merrill is owned by Bank of America. And I was assured that Bank of America would participate in the program. I have been a client of Merrill Lynch since 1989 when I started one of my first businesses. I was sure Merrill would take care of theirs through their parent company.
I was wrong. Like many small businesses, my banking was done on the personal, non-business side of the house. When Bank of America announced its support for the PPP program, it said it intended to only offer support to customers who already had a commercial loan product. No problem, I thought. I’m just going to open a business account. But no. The account was expected to be active by February 15, 2020. Many other major commercial banks have announced a similar program with the same deadline.
Senator Marco Rubio expressed the sentiments of many members of the small business community:
Although the PPP program has been touted as a way to save small businesses, the reality for big banks is that the program is being treated as a reward for its best customers. Hardly the PR message that the CARES Act was designed to send.
So like thousands of other small businesses hoping to keep their staff on the payroll, I was sent rushing to the other banks’ list. What should have been a Financial Thanksgiving instead turned into Black Friday, with entrepreneurs interference to get a piece of the PPP program. It was total chaos.
To be fair, these are unprecedented times for government, as well as for businesses and their employees. But the certainty with which politicians promoted the PPP program has been deeply misleading. We’ll see if the program achieves the goal of providing financial assistance to small businesses that hope to keep operating to weather the storm. With a Republican-led government, I think most small businesses assumed they would just be on their own to downsize and fall back, despite Rubio’s claims.
Like thousands of other small businesses, I continue to apply for the program through any bank I can find. Forbes and other publications have made a good work to transmit information as it becomes available.
author of Forbes Ryan guina summarized where we are with the program: “Unfortunately, tThe program was rushed through the implementation process and was pushed live before the banks had the capacity to create process for accepting and funding these loan applications.
The United States has a long history of creating successful government programs
Like the haphazard nature of handling the coronavirus pandemic itself, it didn’t have to be so. The United States has a long history of creating successful government programs, from Social Security to the GI Bill to Medicare, that work as promised. Hopefully the Paycheck Protection Program ends up being one of those successful programs, and not a futile exercise by an indifferent federal government.