SBA EIDL & PPP funding failure for majority of small businesses

Kabbage to the rescue. Thank you!

CNN Newscast April 19th, 2020

updated 05/01/20 10:26am PST

My wife and myself are not a “traditional small business”, being creatives and Independant contractors. We together with the rest of the people in the same situation, need to address the failures in distributing funds with the stimuli programs introduced by Washington for small businesses.

As small business owners, who were not one of the successful 1.6 million small businesses out of 30 million to receive $349B PPP funding in CARES 1. The EIDL/PPP2 negotiations going on in Washington now plan to fund CARES2 with $310B. This obviously will still fall well short of funding that is required!

Besides the small chance of receiving the required funding for small businesses, the process that banks and SBA are administering the fund handout is surprising, especially seeing how they mis-administered the 2008 programs, helping their own.

Small businesses stand a very small chance of receiving any funds from these stimuli packages under the current bureaucracy!

We are disheartened by the odds in receiving any EIDL/PPP2 stimulus funding due to the inadequacies and procedure by the existing administrators.

Hopefully you can help us, small businesses, receive a lifeline to survive these extremely trying times under the COVID-19 lockdown? 

We need your assistance and funding now!!

Thanks for your support,

Wouter & Julie van Herwerden

Pants inc

But a main gripe with the program has been that banks prioritized their existing customers and large restaurants, which received millions in loans from the PPP, leaving many small businesses without access to the funds intended to keep their operations afloat.

Interestingly I was approached by an Insider, after reading my Post, and allows me to use this public information. Their identity will not be disclosed.

The program was designed not to favor small business such as mine (S-Corp), and Sole Proprietors.

There are different structures that make it impossible for small businesses to gain access to these funds

1 – Basic structure setup by an incompetent government.

2 – Pushed to System max, not able to deal with all the applications. Banks are ill equipped for such a large demand,. restricting applications to the banks bigger clients.

3 – Finance is a Insiders Game

4 – Regulatory problem

Affiliation problem. Exempted restaurants, allowing companies with many outlets, such as Ruth Chris and others, being funded in four days.

 Essentially the companies with the smallest category of payroll (under 60K /mo) have the smallest $ of loans funded by category.   What is notable here is that this is also the largest category by # of businesses.  Virtually everyone you consider a small business is in this category, and yet they are the smallest % of the $ loans funded.

$42M in funding in four days, then a dividend payback of $40M. Much like the banks did in 2008.

Application portals close within hours, penalizing Sole Proprietors and S-Corps, who do not pay themselves. No bank will underwrite these loans.

New CARES2 will have 48 hours before funding runs out. Marco Rubio wants funds to small businesses, but this will not happen.

EIDL & PPP  should could have been run by the U.S. Treasury.

Underwriter told by SBA, that EIDL funding will reduce their PPP funding.

Average EIDL will be larger than PPP loan.

Under guidelines EIDL will wipeout the PPP program.

Only people that fit neatly into these guidelines will get funding.

Sole Proprietor, net on Schedule C is a fictional number, that does not quantify the business. Net Income is going to get 60% of loan in their application.