Paycheck Protection Program round two: Many businesses seek additional funding
As the next round of the Paycheck Protection Program begins, business owners all over the country have tough decisions to make. Recently, the CFO Strategic Partners team released a survey covering business leader’s thoughts and planned actions for PPP round two. Our top takeaway from participants was that if a business qualifies, it will go for the funds, even if it doesn’t currently need the money. While there is optimism for the 2021 economy, business owners want to be prepared.
This round of the PPP has a budget of $284 billion. Although we’re still in the early stages, initial reports say lenders appear to be poised to respond more quickly than the first round of PPP funding.
This survey was answered by people from a wide range of industries including construction, professional services, hospitality, retail, technology, real estate and more. See below for a full breakdown of our results.
Although many people are planning to apply for PPP round two, there’s a lot of uncertainty
Nearly half of our survey participants shared they would be applying for round two of the Paycheck Protection Program. However, over 35 percent of respondents said they’re not sure whether or not they’ll be applying. The second round of PPP is still shrouded in uncertainty, but we expect things to become clearer in the coming days as more undergo the process.
The consensus: If businesses can apply, most likely they will
Although some business owners are uncertain whether or not their business will qualify for a second draw on the Paycheck Protection Program, nearly 65 percent of our survey participants disclosed they would apply if their organization qualifies. Almost 18 percent has shared they won’t apply, while just under 6 percent remains undecided.
Why aren’t businesses applying for PPP round 2? They don’t need the money or they don’t qualify
Nearly 63 percent of our participants stated they will be applying, even if they don’t currently need the money. One participant commented while they don’t need the money now, they might in the future if the situation deteriorates again and are concerned the program would be closed by then. Others expressed concern about rising COVID cases and want to have the funds in case they need it later in the year. Some even shared that if they find later in the year that they did not truly “need” the funds, that they would use them to invest in the business, reward key employees, or improve employee benefits.
PPP round 2 can help businesses replace cash reserves, maintain benefits and continue operations
Our survey shows the reasons businesses plan to apply for round two of the Paycheck Protection Program are across the board. At 38 percent, the majority of respondents plan to use the money to replace cash reserves. This is followed by keeping benefits for employees such as health insurance and maintaining current business operations. Fifteen percent of participants said they would use the money to balance increased costs brought on by Covid-19, while almost 8 percent shared it would be used to purchase PPE. A notable 30 percent of participants disclosed that although the money isn’t critical for their business, they’re still planning to apply. One participant commented they would use it to replace larger ticket items and several others stated it could be beneficial to have if Covid-19 cases continue to rise.
Confidence in the economy is returning, but there may still be doubt
For the participants applying for a Paycheck Protection Program loan, many are beginning to regain confidence in the economy for the coming year. Almost 43 percent of respondents shared they’re somewhat confident in it. However, doubts are still lingering with 21 percent of people feeling neutral and 14 percent of people feeling somewhat unconfident.
Loans from PPP round one are beginning to be forgiven
As we move onto the second round of the Paycheck Protection Program, we want to reflect on the initial rollout of relief. At 59 percent, a majority of our respondents shared their PPP loan has been forgiven.
Many businesses are still feeling effects from Covid-19
While 29 percent of respondents stated business is up 15 percent or more annually, over half are still feeling the effects brought on by Covid-19. Six percent of participants disclosed their business is down over 20 percent or more and 47 percent of participants shared their business is down five percent or less.
Do you need assistance navigating the Paycheck Protection Program round two? Our team of experienced, on-demand outsourced CFOs can provide the information and support you need. Email us at firstname.lastname@example.org or fill out the request for information form here.
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.