More PPP funding coming—but what comes next?

Posted on: April 22nd, 2020

Small businesses across the country have eagerly sought financial relief through the Paycheck Protection Program (PPP) passed by Congress under the CARES Act. Our team of experienced outsourced CFOs worked diligently to gather, decipher and execute the steps necessary to ensure each of our clients was able to apply in a timely manner.

According to a joint statement from U. S. Treasury Secretary Steven T. Mnuchin and SBA Administrator Jovita Carranza, “the SBA has processed more than 14 years’ worth of loans in less than 14 days”. As of April 16, 2020, close to 1.7 million PPP loans were approved, and by Friday, April 17, 2020, the SBA announced the funds were depleted and no more applications were being accepted. Even at 1.7 million loans approved, this still leaves about 95 percent of the 30 million small businesses in the United States without critical funding needed. 

A survey published by our CFO consulting firm last week revealed that of those who applied, only 16 percent had received funding at the time the survey was completed.

The question on everyone’s mind now is…What comes next?

Additional PPP funding: On Tuesday, April 21, the Senate passed a relief package that included more than $300 billion in additional PPP funding. It is expected that the House will vote on the measure on Thursday, April 23, and that President Trump will sign it this week. In the meantime, some banks are advising clients who did not receive funding to apply with multiple lenders. This strategy will allow them to be in the queue for the next anticipated round of PPP loans. Those who have already submitted an application but did not get funding should automatically be in line if and when another round is approved, but they should verify this with their lender. Those who did not submit an application but would like to do so should apply now in anticipation of another round of funding. Most lenders are still accepting applications in anticipation of a second loan program being announced.

Main Street Lending Program: For the “midsize company,” help is arriving in the form of low interest rate loans as part of the Main Street Lending Program. While there is no minimum company size requirement for eligibility, the minimum loan size is $1 million; therefore, smaller companies are less likely to meet underwriting requirements. For companies with $250,000 in EBITDA and no debt, this is an opportunity to get access to low interest rate capital with longer repayment terms. 

If you have been fortunate enough to receive PPP funding, you are to be congratulated for navigating very difficult terrain. However, there is more to be done. As important as understanding the changing requirements and varied application procedures was to obtaining this money, the process of properly handling the Forgiveness Calculation required at the end of the eight-week period following receipt of the loan funds is just as critical. The experienced Orlando CFOs on our team have spent hundreds of hours researching the nuances and requirements of these calculations and have already developed subject matter expertise on this crucial step in ensuring that the clients we serve retain the highest amount of loan forgiveness possible.

The CFO consultants at CFO Strategic Partners have assisted nearly 100 clients in many different industries to successfully navigate the challenging dynamics of the PPP. If your business could benefit from the leading edge knowledge of an experienced outsourced CFO on an demand basis, visit us at http://www.cfosp.com, email us at admin@cfosp.com or call us at 407-426-8288 to learn more.

NOTE:  Given the current evolving economic climate, CFOSP is publishing more frequent communications on this topic based on what our clients are experiencing and our firm’s expertise.  Stay tuned for updates or click here for more content on this topic.

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