News Roundup for Small Business Owners: April 6, 2020

Here’s the latest news about relief efforts for small businesses, particularly via the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans:

• Wells Fargo has “reached lending capacity” due to Federal Reserve restrictions and focusing efforts on smaller small businesses (under 50 employees) and non-profits who support small business.
• The Federal Reserve is stepping in. Sparse in details as of yet, the central bank announced they will create a facility to provide financing for PPP loans. What this likely means is that they will purchase debt from lenders to increase those institutions’ lending capacity.
• Bank of America received 177,000 applications seeking $32.6 billion in applications. That’s about 10% of the entire amount allocated. And keep in mind that BofA is restricting applications to existing customers who already have debt with them. These are just applications submitted, not approved, but let’s extrapolate based on the numbers we have. The average requested amount is $184,181. Taken one step further, it implies an average monthly payroll of $73,672. Based on the U.S.’s median income, that means the average company who had applied for a PPP at BofA has about 15 employees. I’ll continue to expand on numbers as they get announced.
• Remember the $10,000 loan advance from the EIDL Program? Well, according to the Massachusetts SBA District Office, the advance is based on the number of employees: $1,000 per employee up to $10,000.
• The EIDLs and PPP Loans are taking much longer than anticipated to fund. If your business needs money immediately, the SBA has created an Express Bridge Loan (EBL) Pilot Program. This allows for companies with existing relationships with SBA Express Lenders to apply for up to $25,000 for disaster-related purposes. These expedited loans are intended to bridge the gap for small businesses awaiting long-term financing via the PPP and EIDL.