The Paycheck Protection Program (PPP) ran out of the initial $349 Billion in funding on April 16, 2020. Many businesses applied but haven’t received funds. Others didn’t apply and are wondering what to do next. We believe there will be more funds to this program and here is a list of next steps if you don’t have Paycheck Protection Program Funds.
Step 1 – Do Not Despair as Additional Funds are Expected
There have been discussions between the White House and Congress about additional funding. $251 Billion of additional money has been requested to continue the PPP. Most experts agree it is a matter of when additional money is authorized and how much it will be, but not if it will happen. Our best guess is the beginning of next week – April 20.
Step 2 – Understanding if Your Application Was Approved
The challenge in this 13-day race for PPP loans was understanding if your application was funded. Many big banks were unprepared for the onslaught of applications and their portals and teams were unresponsive. Small banks tended to be more responsive but couldn’t manage volume. Here is an outline of the general process to help you understand where you were.
Phase 1 – Application
If you applied for the loan, all it means is you send information to a lender for processing. There is absolutely no guarantee that your loan was secured or will be funded. That said, some banks like Chase had all subsequent processes baked into their application so money may magically appear. This is likely the exception.
Phase 2 – Underwriting and Approval
This is the phase where lenders review your application for approval. Some provided feedback and request for more information. Others rejected applications for small errors. Once they were comfortable with your application, your loan was approved. The challenge is approval does not guarantee a loan.
Phase 3 – SBA Loan Approval
This is the most critical step as it locked in your loan. A lender took an approved loan and entered it into the Small Business Administration’s (SBA) E-Tran system. The lender should receive an E-Tran loan number indicating a loan is secured. This does not guarantee immediate funding but secures the loan to be funded. If you heard back from your lender with an E-Tran number, you are on your way and highly likely to get funded. I say highly likely because there is a small chance for issues, but these should be rare.
Phase 4 – Loan Documents
The lender will now send you loan documents for signature. Be aware that many lenders slowed down their loan document process in a push to secure E-Tran loan numbers. These documents tend to be long with a lot of legalese. Take your time to review for accuracy then sign away as this is all that is between getting funded.
Phase 5- Funding
Lenders are not obligated to fund for 10-days after loan approval. This is probably to allow them time to get out loan documents and sell previous loans back to the SBA to keep their assets liquid. This is lame, but at least you know what to expect. If you received an E-Tran number and haven’t seen loan documents or funds, time to hit up your lender hard.
Step 3 – Applied, but Unsure of Loan Status
If you aren’t sure about your loan status, reach out to your lender and ask them if your loan was approved and if it has an E-Tran number. If they say yes, ask them when loan documents can be expected. If they say no or don’t respond, skip to step 4.
Step 4 – Preparing to Apply
It’s lame but be prepared to apply to multiple lenders for round two of PPP funds. We explored four lenders for our PPP loan here at LedgerGurus. We applied with three and had success with one. There was some debate about whether you could apply at multiple lenders, but many experts have said yes as only one lender can secure the E-Tran number. The challenge is our many applications clog the system. I hate this, but you have to do what it takes. As consideration for others, withdraw your other applications if you had a loan secured.
Use the next few days to find vendors that were funding or new vendors coming online that are designed to scale.
We really liked Divvy’s PPP Loan application. They are dependent on a partner Cross River Bank for phase 2 to 5, but you will know how to get through the application and their support is fantastic.
Here are some Fintech vendors that were struggling to launch but may be able to process loans in round two:
The best success may be a small bank who remains undiscovered or was handling the process transparently.
Keep your hopes up and watch for the PPP loan program to get additional funding. Stay focused and have a loan application strategy. If you’ve secured a loan, hang on. Money should be funded in a maximum of 10 days. If you need help, reach out to us here.