Later deadline for U.S.backed business loans
Small businesses have another chance to apply for the Paycheck Protection Program after President Trump signed a deadline extension into law on Saturday.
Businesses have another month, until Aug. 8, to apply for the loans, according to the Small Business Administration. The PPP is a federal loan forgiveness program created in April to help businesses cope with the economic hardship caused by the coronavirus pandemic.
When the program began, there was a mad rush to apply for the loans, mostly due to the loan forgiveness rule. The program doled out $349 billion in two weeks and hit its limit. Demand is weaker for the second round, which got an additional $310 billion after the first round ran out. About $130 billion remains
unclaimed.
The Small Business Administration does not lend the money; instead it asked banks and other approved lenders to do so while it backed the PPP loans. The application process has been difficult for many businesses.
Renee DeWeese Moran, coowner of Performing Academy, a children’s performing arts center with three East Bay locations, had to wait for the second round of funding to kick in after the first ran out. She cut staffing and pay as her studios closed. Eventually, she received $48,000 in funding from First Bank in April.
“We were nervous, as the funding we received was crucial to our financial survival this summer,” Moran said.
After offering virtual classes for three months, her Lafayette location will begin inperson classes this week, but only to a small number of students, she said, adding that online demand has come in from students from as far as New York and New Jersey.
Allan Mann, who coowns Under One Woof, a pet grooming service in Alameda, with his partner, Seiji Morikawa, said they gave up on a PPP loan after a third rejection from Citibank. Citibank did not return a request for comment.
Mann said they had better luck with other federal and local relief programs, getting a $10,000 advance from the federal Economic Impact Disaster Loan and a $7,500 grant from the city of Alameda. They’ve also been approved for a $2,500 small business grant from Facebook, he said.
“That will be enough to cover the expenses we couldn’t avoid while we were closed,” Mann said. “Our dog grooming business is up and running, and we’ve got a backlog of customers, so I don’t anticipate any major financial problems.”
That’s a far cry from the situation he was in two months ago, as income dropped to zero from an estimated $65,000 in revenue per month while expenses, like $3,860 in rent, were piling up. At the beginning of the Bay Area’s shelterinplace health orders which took effect in March, Under One Woof had 17 employees, all of whom were laid off. Now, the business has rehired seven people, according to Mann. Others will have an option to return when business picks up, he said, though at least three do not want to come back till the pandemic subsides.
The PPP program has changed since it began. Businesses that want to qualify for loan forgiveness now need to allocate 60% of the funds to payroll instead of the original 75%, and they now have 24 weeks instead of eight weeks to spend it, in order to be eligible.
According to the latest data, the Small Business Administration has approved 4.9 million loans for a total of more than $521 billion, with the average loan being a little over $100,000. California, which has more people than any other state, ranked the highest, with $68 billion in funds received by businesses, followed by Texas at $41 billion and New York at $38 billion. Sectors getting large shares of PPP dollars include health and social assistance, technical services, construction and manufacturing.
On Monday, the Small Business Administration also released a list of businesses that received more than $150,000 in PPP funds across the country. Some San Francisco businesses that received between $5 million to $10 million in funding include Golden Gate University, the California Academy of Sciences, Metromile and the Catholic Charities of the Archdiocese of San Francisco, among others.
“That will be enough to cover the expenses we couldn’t avoid while we were closed. Our dog grooming business is up and running.”
Allan Mann of Under One Woof in Alameda, on a federal loan and a city grant after three rejections for a PPP loan