PPP For Startups – What We Have Learned the First Week
April 10, 2020
The Paycheck Protection Program (PPP) is a week old. This is what we have learned in the first
The fever pitch has subsided – there was a lot of anxiety about this being a “first-come-first-serve” program and $350B would not last long. As of today, there was about $125B committed and DC is working on appropriating an additional $250B.
The payroll companies finally fixed their reports to correctly calculate the loan amount.
Most of the banks got their act together and worked out the kinks in their systems.
Seems to be momentum not to take the PPP money if a Company does not need it – VCs leading this movement and it is building steam.
A lot of businesses are developing strategies to maximize their “forgiveness” amount/period by delaying their PPP Note until they are ready to recall their employees (unemployment amount was “juiced up” by $600 per week, so many workers are making more money unemployed).
A lot of businesses are developing strategies to coordinate the SBA EIDL loan and PPP. First $10K of EIDL is forgiven, no questions asked.
A lot of application problems if there is a 20%+ foreign shareholder without an SSN or ITIN.
Many firms have submitted more than one application – a cardinal sin. Lenders have been good about pulling the application if contacted, though, as most have not submitted it to the SBA, yet.
Not much guidance available yet for independent contractors/sole proprietors. They can start applying on Friday, April 10th. Many questions on the present online applications make no sense for independent contractors.
The following very interesting reps were in our BOA PPP Note that we just received:
Borrower will not outsource or offshore jobs for the term of the Loan and two (2) years after completing repayment of the Loan.
Borrower will use the funds of the Loan to retain at least 90% of its workforce, at full compensation and benefits, until September 30, 2020.
Hearing about more banks allowing non-customers to apply for the PPP with them. If you are looking for one, shoot us an email.
Our prediction: in a few weeks there will be tons of banks advertising for this business. They get 5% for most of these loans. So, the program should grow to $600B – at 5%, banks will receive about $30B in fees for a 100% guaranteed loan that will probably be forgiven in 90 days. They never lose!