The Paycheck Protection Program Could Have Been Great—It Wasn’t

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U.S. President Donald Trump and Steven Mnuchin, U.S. Treasury secretary, Photographer: Al ... [+] Drago/Bloomberg© 2020 Bloomberg Finance LP

With the first round of Paycheck Protection Program recipients about to submit for loan forgiveness, I thought it might be interesting to look back on the process my small business went through, first getting rejected, then getting accepted but considering returning the loan, and ultimately deciding to use the loan to retool our business for the road ahead:

I first hear about the Paycheck Protection Program on a podcast discussing the possible provisions of the CARES act. The program is described as “a loan that becomes a grant for small business.” It sounds too good to be true.

The Paycheck Protection Program is announced as part of the CARES Act. $359 billion has been set aside to help small businesses keep their employees during the pandemic. The program is announced at the same time as a forgivable emergency disaster payment and pandemic unemployment assistance boost of $600 per week for four months. My first thought is that the programs seem to overlap somewhat, but I’m pretty sure that government professionals will be able to work out the details.

For the first time ever, I go on the Small Business Administration site to get more information about the programs. I apply for a Disaster Assistance Loan, which turns out to be ridiculously easy. Since we had to lay off our employees and shutter our business due to shelter-in-place orders, I’m thankful for the consideration and efficiency promised by these programs. I expect to find a quick and easy list of PPP lenders but can’t seem to find it. I spend the next few days attending webinars and scouring Twitter for information about how I can find a PPP lender. I’m not too worried, though. I have been banking with Merrill Lynch since 1989. Since Merrill was bought by Bank of America during the last financial crisis, I’m confident that BofA will take care of me.

Alas, I learn that Bank of America will not take care of me. After realizing that the link between Merrill and BofA is more promotional advertising copy than reality, I am told that unless I had a business account with Bank of America by February 15, 2020, I won’t be eligible to apply for a PPP loan. When I ask why, I’m told that BofA has decided to serve its existing customers first. This seems strange, since the PPP program is ostensibly for small businesses, and lots of small businesses run their operations by managing cashflow, not borrowing money. Senator Marco Rubio chimes in with his disappointment in the big banks for deciding to serve big customers instead of smaller guys who need the help. I’m pretty confident the problem will be fixed.