- First go-around with PPP riddled with problems and chaos
- 1st go-around ran out of$349B in 13 days and most small businesses shut out of money while large companies received millions
- 2nd go-around has additional $320B
- SBA website crashed within 20 minutes and remained down throughout the day
The first round of funding earmarked for small business relief from COVIC impacts was designated to the Paycheck Protection Program (PPP) under the umbrella of the Small Business Administration. The PPP had $349B in loans to distribute to small businesses and ran out of that money in 13 days.
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Some of the “small businesses” approved for PPP loans during the first round have since chosen to return the loans granted to them. Some of the companies that returned loans are names you know…company names such as:
- Auto Nation returned $77.0M
- Penske Automotive Group returned $66.0M
- Ruth Chris Steak House retuned $20.0M
- Shake Shack returned $10.0M
- Los Angeles Lakers (estimated worth of $3.7B by Forbes) returned $4.6M
Here we are again for another go-around of PPP loans to small businesses. This time, the PPP has $320B in loans to distribute and this time, the SBA website crashed within 20 minutes of its “open for business sign” to lenders that had processed applications from small businesses. The SBA website remained down throughout the day.
What happened the first time?
- Chaos ruled among confused lenders about which companies would be eligible to qualify for loans, how loans were to be distributed and how loans could eventually be forgiven.
- More than 200 publicly traded companies were allowed to obtain PPP loan funds that totaled +$750M
- 1st go-around loans were steered through private sector financial institutions so the government could outsource the program’s legwork to banks
- Bankers didn’t get information or materials about the program’s functioning until after program initiated and some banks just started lending before details hashed out
- Some companies with multi-million dollar credit lines and strong balance sheets received multi-million dollar federally backed loans with rock-bottom interest rates that can be forgiven if, among other things, the borrower maintains the size of its workforce even as restaurants are closed to due COVID restrictions.
What’s happening the second time with PPP funding of an additional $320?
- This time, one third of the $320B is earmarked for small, community banks to help ensure that small businesses, not preferred customers of big banks such as Auto Nation or the LA Lakers, receive this financial lifeline.
- B U T – SBA website to which lenders are supposed to sent their approved company loans CRASHED WITHIN 20 MINUTES THE MORNING THE PPP WAS AGAIN OPEN FOR BUSINESS – THE WEBSITE WAS DOWN THROUGHOUT THE DAY
By the way, the government is paying bankers fees and interest to make these loans. As of last week, lenders had “earned” $10B for doing the minimal processing these loans require.
By the way, the SBA “usually” handles $30B in loans per year BUT OBVIOUSLY NOTHING WAS DONE TO BEEF UP THE SBA WEBSITE TO HANDLE THE CRUSH OF APPLICANTS FOR $320B IN LOANS.
Thanks to The New York Times and National Public Radio.