APRIL 14, 2020

News Roundup for Small Business Owners

The latest news about relief efforts for small businesses, particularly via the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

• The Treasury Department finally provided new guidance today that explains how lenders should handle independent contractors, including gig economy workers. The main thing I see is that independent contractors must include their 2019 Schedule C and Form 1099-MISC as evidence of the loan amount (or bank statements showing self-employment). It doesn’t require the applicant to have filed 2019 taxes, but you will need to complete them before you apply.
• Republicans and Democrats continue to squabble over the next round of PPP funding. When partisan bickering occurs, this former PoliSci major looks for those swing votes in the middle. I found this quote from Sen. Jon Tester (D-Montana) illuminating: “I’m not opposed to infusing money in tough economic times. What I am opposed to is putting money where it’s not going to do the maximum amount of good. If we don’t deal with the health care issue first, the economy is not going to snap back.” He went on to say the $350 billion Paycheck Protection Program was supposed to last for two months: “So if that isn’t happening we should find out why.” In other words, if moderates are holding their ground against the GOP, I wouldn’t count on more funding for PPP in the near-term. I hope I’m wrong. (Politico)
• Thanks to those small business owners who have filled out the survey at COVID Loan Tracker. They now have data from nearly 7,000 small businesses. Of those, 4% have received the PPP with a median loan size of $165,000. The PPP is expected to exhaust its funding by Thursday at its current run-rate, according to Larry Kudlow, the administration’s chief economist. As of today, the PPP has funded 1.1 million applications for $257 billion. That means there’s around 25% left. The average loan size has trended down a little from yesterday, from over $250,000 down to $234,000 on average. That implies “smaller” small businesses are getting funded as time goes on. (COVID Loan Tracker, Yahoo Finance)
• Main Street America, a network of of 1,600 commercial districts, surveyed nearly 6,000 small businesses that are part of their network. The findings are not pretty. 80 percent of the surveyed businesses were already closed temporarily, meaning those businesses may not be helped much by PPP (see this article from last Thursday’s roundup). If you extrapolate the survey’s stats across all small businesses, 7.5 million small businesses will be at risk of closing in the next 5 months, meaning 35.7 million workers would be facing unemployment. LendingTree did a similar survey of 1,200 businesses, finding that over 70 percent of them didn’t think their businesses would ever recover from COVID-19. (Main Street America, Entrepreneur)

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Monday, April 13 | Friday, April 10 | Thursday, April 9 | Wednesday, April 8 | Tuesday, April 7 | Monday, April 6

Masterplans is a veteran-owned business that specializes in providing the highest-level business development consulting located in Portland, Oregon. For 17 years we have helped thousands of entrepreneurs launch new businesses and put their ideas in motion. Now, more than ever, we want to see these same businesses survive the largest economic disaster of our generation.