May 6th, 2020- Many of Illinois’s smallest businesses and sole proprietors missed the federal government’s first round of emergency funding through its Paycheck Protection Program.
Elliot Richardson, founder and president of Illinois’s Small Business Advocacy Council, said that there has been a “tremendous amount of frustration” because small businesses hoped to get “critical access to capital.”
People were stunned and very disappointed to see how fast the $349 billion in emergency stimulus money from the first round of PPP disbursements disappeared, he said. The money was gone within 13 days. One problem was the complicated application process.
“The entire process was very difficult to navigate,” Richardson said.
The Small Business Advisory Council tells business owners to find a trusted financial expert, such as an accountant or a lender, to use as a guide to the application process, he said.
He said that the second of the emergency program will include more community banks and credit unions that can be more responsive to smaller businesses.
Business owners who were successful in the first round were very persistent, Richardson said. Nonetheless, he said there were prepared and persistent business owners who did not receive funding.
The Small Business Advocacy Council advises business owners to submit the paperwork for the second round as soon as possible.
Second-round funding will run out even faster, he said, because lenders have an application backlog. Congress agreed on April 21 to add $310 billion to the PPP. The new round of funding will also add $60 billion to a separate emergency loan program for small businesses, the Economic Injury Disaster Loan program, which the U.S. Small Business Administrations manages. That program was oversubscribed six-fold in the last round of PPP payouts, Inc. Magazine reported.
The United States has about 30 million small businesses. By definition in the CARES Act, a small business can have as many as 500 employees. A small business can also be a sole proprietorship, such as a wedding photographer or a barber who works for himself and rents one chair in a shop.
Richardson recommends that small business owners consider a variety of loan programs – not just PPP. “They should look at state programs and they should look at federal loan programs. They should really think about casting a wide net and applying where they can,” he said.
One solution by itself is not going to do it, Richardson said.
“What we would like to see is a comprehensive strategy, put forward by policymakers on all levels, to help small businesses keep their doors open and retain employees.”
