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Nearly two weeks after the federal government began accepting applications for the Paycheck Protection Program (PPP), the U.S. Small Business Administration announced that the program has reached its $350 billion cap.
PPP loans are a part of the CARES Act — the Coronavirus Aid, Relief, and Economic Security Act — which is pumping $2 trillion into the American economy in an effort to mitigate the economic downturn caused by the COVID-19 pandemic. Beginning on April 3, small businesses put in their application to secure loans that would cover 2.5 times monthly payroll.
SBA shared state-specific PPP loan approval data as of April 16, which shows that 3,253 D.C.-based small businesses were approved for a little over $1.2 billion in relief funding combined. Virginia was approved for $8.7 billion in funding spread across 40,371 PPP loans, while Maryland saw 26,068 loan approvals for a total of $6.5 billion.
With banks like Wells Fargo closing PPP loan applications early, and Capital One never accepting applications, other institutions, including Bank of America, stepped up to aid small businesses. Locally, Rockville, Maryland-based Capital Bank issued 597 PPP loans totaling $173 million.
When Technical.ly checked in with a group of D.C.-area organizations about the PPP loan process two weeks ago, many had still applied for funding despite confusion surrounding the application timing and certain qualifications.
Tech inclusion nonprofit Byte Back heard of its PPP loan approval with TD Bank on April 9. Byte Back Communications Director Yvette Scorse told Technical.ly the org was able to secure funding due to Financial Director Isel Perez-Castellanos diligently leading the process with the help of the company’s banker, John Tucker, to submit an application as soon as possible.
“This will help Byte Back fund 2.5 months of payroll, giving us, as an organization and as staff, added security that we will continue operating throughout this crisis and beyond,” Scorse said.
D.C. Startup Week organizer Rachel Koretsky said she applied for a PPP loan through New York-based Fundera, a small business financial solutions provider. She said she received a confirmation email after applying, but hasn’t heard an update on the application since.
“It is very stressful to be waiting and waiting and waiting!” Koretsky said. “We do not have plans for other loan options as we are spending smartly and having transparent conversations with our clients on their funding to predict what revenue will be coming in over the next few months.”
This has been the case for Wharf-based OurStreets, which also has an application in the processing phase, the company’s founder Mark Sussman told Technical.ly. Sussman submitted a PPP loan application on April 4 through BBVA USA, and still hasn’t heard a decision. This is the only COVID-19-related federal relief program the company plans to apply for.
“It’s been nerve-wracking,” Sussman said about waiting to hear back. “The PPP program would essentially double our current runway, so it’s vital for us to continue operating.”
In the mean time, Sussman said he and cofounder Daniel Schep have taken “fairly significant pay cuts” to keep their five-person team afloat. With a successful pivot to OurStreets Supplies, the company also just kicked off a seed round.
“We think getting some investment capital is a real possibility, even during these times,” Sussman said. “We’re going to need an infusion of cash in some form in order to continue operating.”
Unfortunately for WeWork Navy Yard-based CUCollaborate, the company was denied PPP funding from its lender, Signal Financial Credit Union, according CUCollaborate COO Chris Tissue.
“They cited funding shortfall,” said Tissue. “[We’re] hoping to get approved under a new bill which will hopefully get passed by Congress.”
A new relief bill is indeed expected to pass this week, potentially offering another $300 billion in small business loans, though experts expect that funding to be claimed even more quickly this time around.
Though he didn’t disclose a name or company, Tissue said he has a friend who was approved for a PPP loan through PNC — and “they were #362 on their list and just signed final documents yesterday if it gives you any idea how ‘quickly’ that program is moving,” said Tissue.
Gregory Scott, president and CEO of Springfield, Virginia-based software integration company Service Robotics & Technologies, submitted a PPP loan application through Bank of America. The company is currently developing a mission control center for monitoring and controlling smart buildings.
“As a pre-revenue startup, we still have runway for a few more months, but the crisis impacts our ability to sell our product since customers are taking a bit of a break from purchasing,” Scott told Technical.ly.
Since submitting a loan application, Scott said he was notified five days later to upload new documents. After doing so, no action has been taken on the company’s application.
“We’re frustrated at the lack of transparency in Bank of America, and annoyed that the entire PPP program has been cleaned out in two weeks,” Scott said. “We’re literally asking for $30,000 in support, compared to the bigger ‘small’ businesses that have already been approved for millions. As a taxpayer, I didn’t think that’s how the program should be executed. As a small business leader, well, it’s extremely frustrating.”
Just in case the company doesn’t secure a PPP loan, Scott said he has applied for about five other grant programs to hopefully secure funding a different way. Scott said Service Robotics & Technologies has won a Navy SBIR grant, which will help hold the company over for a few months.
But “clearly,” he said, “PPP would have allowed us a bit more flexibility.”-30-
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