I was on the phone until almost 11pm last night talking with several different bankers about the PPP loan program.

The US Treasury and SBA issued a 31 page “Interim Final Rule” (LOL – kind of an oxymoron, no?)

yesterday afternoon at about 4pm. There are some clarifications in it, and a couple small changes:

• The loan term, for unforgiven portions of the PPP loan, is going to be 2 years, not 10 years;
• The interest rate is increased from 0.50% to 1.00%;
• As we reported yesterday, they have included payments to 1099 contractors as part of the definition of “Payroll Costs.” It will be up to the lender to determine what contractor payments can be part of the maximum loan, and what payments are not permissible. Make sure you include these costs in your Average Monthly Payroll Cost figure, though.

Most importantly! The banks and US Treasury are still pushing back and forth on some terms and some banks will not be accepting applications today. We’ve heard from several banks that they are finalizing their online application webpages and won’t accept applications until those websites are completed. So, be patient with them – they have had to pull this all together in less than a week amid shifting methodologies and rules. The money is not going to run out in 1 day!

We are very sensitive to small businesses’ need for cash right now and can understand how many owners feel like they need to get their application in right away or they are going to miss out on this opportunity for “free cash.” While we don’t think business owners should delay, it’s important to know the following:

• There are 30 million small businesses in the US employing about 60 million people
• That would create an average loan of about $12,000 per business
• $12,000 per business x 30 milion businesses = $360 billion. The PPP program has $349 billion committed to it.
• So, if every small business in the US applied for the maximum loan amount, the program is already funded with 97% of what is required, and Secretary Mnuchin has said several times that if more funding is needed, then he will go to Congress and get it.

I’m sharing this logic, because as important as getting this loan is for so many businesses, we need to be realistic in the timing. The banks have never processed these many loans, in this short a window, with brand new rules. Everyone is learning how to do all this for the first time. So, if your bank doesn’t open its applications up today – it’s ok – it’ll be Monday or Tuesday of next week and you won’t miss out on this opportunity.

Also, note that almost all lenders will require you to (a) have an account at their bank in order to process the loan, and (b) be setup for online banking. So, it will be advantageous for you to work with your existing business bank since you already have an account there. Otherwise, a new bank will have to run through all the Know Your Customer rules with you which will slow down the process. Even if your bank isn’t a current SBA lender, almost all FDIC insured lenders will be able to make these loans in the next week. So, again, be patient.

Last word of advice: Don’t apply for a loan from an email link!

There are lots of spammers and phishers out there right now trying to take advantage of this panic-stricken time. The SBA will not send you and email with an application. The US Treasury will not email you an application or link to an application. Your bank will not email you an application or link to apply.

Instead of clicking email links, go to your bank’s website directly. They will have a link on their homepage to the PPP loan program application. See this snap from Valley bank, for instance:

We will continue to support you through this time, and as we learn more, we will keep you in the loop!

Ben