The current situation for small businesses amid the COVID-19 economic shutdown can be described as messy at best. Small business owners are scrambling to manage these unprecedented times and preserve their livelihoods. According to a nationally representative survey conducted by WalletHub, 87 percent of small business owners say they are struggling due to the coronavirus pandemic.

The first round of the Paycheck Protection Program (PPP) funds ($349 billion) intended to help small businesses was gone in less than two weeks, claimed by around 1.6 million small business owners. While that sounds like an impressive amount, that number only accounts for 6 percent of America’s small business owners – that leaves 94 percent to fend for themselves.

At the end of April, President Donald Trump signed the $484 billion COVID-19 rescue bill, providing an additional $310 billion in new money for the latest bailout. This second round of funding is now available. With no clear end in sight to the current pandemic situation, small business owners are doing their best to navigate the unknown, make sense of application requirements and keep their businesses afloat.

The Bumpy Start of the Payment Protection Program

It has not been easy for small business owners to make sense of the government’s plans and application requirements. From the very beginning, the program was ambitious. Considering that there was less than a week’s notice to assemble a form process and begin accepting applications, challenges, delays and failures were expected by all.

Despite the government’s intentions, the big banks that participated in the program prioritized their customers first, especially those seeking larger loans. This was also in an effort to maximize profit and minimize risk. Mom and pop shops and small business owners with no prior relationship with an SBA-approved lender found themselves with no where to turn.

There was also the issue of ever-changing requirements. This caused many business owner’s applications to bounce back from the SBA. Early on, many lenders found that the PDF application the Treasury had released was missing key data points (e.g. date of birth, business start date, 6-digit NAICS industry code, etc.) that are required when submitting through E-Tran.

Days into the launch, the rules also changed about whether a business owner could submit an application to more than one lender. Of course, for desperate small business owners trying to dot every “i”, and cross every “t”, this created a lot of confusion and frustration. All of this, and 28 million business owners in the U.S. still do not have the cash they need to weather the current crisis.

What to Expect with Round Two of PPP Loans?

With the second round of PPP loans now available, all involved are hopeful that things will run a little more smoothly and more small businesses will (quickly) secure the cash they need. The fact that fintech and non-bank lenders have now been approved to participate in the distribution of PPP loans will make a big difference moving forward.

Also, the U.S. Small Business Administration finally released much-needed guidance for small business owners on how to qualify for loan forgiveness under the Paycheck Protection Program. Even so, the form still does not answer all the questions small business owners are asking. The SBA followed-up the announcement with a promise to release more guidance to both borrowers and lenders very soon.

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