- Everyone I'm Scott Shigeoka.
- I'm GoDaddy's Entrepreneur-In-Residence,
and I'm here at home sheltering in place
and for the next 15 minutes or so,
I'm gonna be doing a roundtable with some experts
about PPP or the Paycheck Protection Program.
There's been some updates, and we have some new questions
that we want to dig into, like, what's different
about this round versus the first round
and how should we approach lenders and small business owners
to capitalize on this opportunity?
What are some barriers or challenges we might expect
to small business owners?
So to answer these questions, we're bringing back a group
of experts to talk about this together with me.
We have John Stanford from the Association
for Enterprise Opportunity.
We have Brian Peters from the Franklin Square Group
and Ashley Heineman, who's GoDaddy's Director
of Global Policy.
And just before we begin, I wanted to disclaim
that this isn't legal or financial advice.
There's a lot of trusted news sources
and authoritative websites where you can get information
and those links are actually gonna be below.
But I'm hoping that this roundtable
that we're doing is a great discussion
that helps you as an entrepreneur
and all of our community get through this COVID-19 crisis.
Thanks again for joining me, everyone.
I'm hoping we can start with a little reminder,
what is the CARES Act and what specifically is the PPP.
- The CARES Act
is a $2 trillion stimulus program that consists
of stimulus payments
to individuals,
those with the stimulus checks or payments
that everybody's getting.
It's roughly a half trillion in small business loans
that we'll talk a lot more about today.
Then another half trillion for larger business loan programs
administered by the Treasury Department
and the Federal Reserve
- And there were some recent policy changes to the PPP.
Right? - I think one of the
most newsworthy elements of PPP in the CARES Act was
how speedily it ran out of funding.
We knew that Congress would refill that program
and that's what they did.
So by and large, PPP really didn't change
in what we're calling CARES Act 2.0.
But there were a couple slight changes, most notably
was the addition of two separate pools of money.
As many folks saw, there were concerns
that the initial batch of funding for PPP wasn't reaching
the smallest or rural or minority business owners.
So one of the ways Congress tried to address this was
by creating two additional pools of money.
30 billion was set aside for mid sized lending institutions,
those with 10 to 50 billion on their books.
Then 30 billion was set aside for institutions
with less than 10 billion on their books.
I think the jury and the data is certainly still out
but we do know just like the first time around,
this money is and has moved quickly.
- Could you talk a little bit about the challenges
and some of the frustrations that small businesses might
be facing right now?
- There's just
an overwhelming demand of interest in these loans
first of all, and the infrastructure just isn't set up
in a way to handle it.
If you look at where things were last year outside
of this pandemic situation, you had just
about as many applications for loans as you've seen
in the last two days.
So you really just have a system that's in place
that's not capable of dealing for the type of volume
that you're seeing in terms of interest in these loans.
You had banking institutions having to constantly refresh
just to get the loans of their clients processed
and submitted to the SBA.
Then there's also been issues in terms of getting updates
with respect to what the status of the applications are.
What happened in the last round basically,
is that a lot of applications went in and the money ran out
for the program before they were able to be processed.
So this has been really difficult in terms
of a small business in particular who really wants
to have some assurances that all
this hard work is gonna pay off.
- So with these changes with the PPP, do we think that
the money will actually get to small businesses this time?
- Well, as John mentioned,
they have designated two chunks $30 billion for
medium sized banks and another 30 billion for small banks.
I think one of the challenges is though
that is based on an assumption that medium size
and small size banks mean small businesses.
That's not necessarily the case.
You could have a very small community bank on the corner,
but they may ultimately distribute loans to large businesses
in their community and not necessarily
the barber shop or the coffee shop.
- All right, so one thing I keep hearing
from small business owners is, which lender do I go to?
Do I go to a smaller bank, do I go to a larger bank?
What's your advice?
- I think
it's kind of a knowledge tree or decision tree
of first go to the bank who knows you
already.
If you have a bank who knows you, there are restrictions
around know your customer rules
and anti-money laundering rules that will make getting
you on boarded faster and simpler because
the bank knows you.
But my underlying recommendation is, don't put all your eggs
in one basket.
You are only allowed one PPP loan for your business.
It doesn't mean you're only allowed one PPP application.
So I would pursue these lines with whatever you can,
if you have the time and opportunity
and wait to see which one confirms alone with the SBA first.
There's nothing that's preventing you from
then pulling back all the other applications
and pursuing the one that actually went through.
I think the folks who try multiple ways to get these loans,
will probably be the ones at this late hour
that have a semblance of success.
- So it sounds like the money
for the second round is running out.
Should we expect that there's future rounds coming soon?
- We're really not sure.
We've heard from many of the key stakeholders through
this process,
whether that's folks in the senate,
folks at the Department of Treasury, folks at the SBA.
Some have been very explicit that they don't see
the PPP program having continued funding
and that the 600 plus billion dollars is sort of
the end of the road.
I think there are many more folks,
there's certainly been a large advocacy effort
to expand the program and to expand the time horizon
of the program.
The last piece I'll say on this is many of the challenges
that the program has that have already been spoken to,
are issues that we have known for a long time.
Coronavirus isn't necessarily causing new divides
about who is gonna recover fastest and resiliency,
it's exposing what we've known to be true for decades.
Capital access is a bigger challenge in certain places.
Under banking in under served areas is a challenge
and we're only seeing it really come
to a head during the crisis.
So I think we'll continue to need to explore
what options are best for those communities.
- Could you talk a little bit about the PPP in particular,
and whether there was any racial disparities
or racial inequity that was at play in regards to how
the funding was distributed? - If you look at this program,
like any other federal program,
they do have language built in what they consider
to be approaches to dealing with minorities
to dealing with tribal situations to dealing with veterans.
That...
The right words are there but at the end of the day,
you look at the data.
The ones that end up profiting the most
from these types of programs are the large businesses,
the ones that are more tapped in.
So I think having a complete overhaul
of the system is probably something that's long overdue.
- Is there any evidence to show that
this is making a difference for small business owners?
- I have not seen
a lot of anecdotes of companies out there that are
jumping for joy that they received their PPP loan.
But who knows?
I'm sure we'll start to see more evidence
and more anecdotes as we see some of the better stories
out there.
- I agree
completely with Brian.
But if you look at the numbers coming out of the SBA,
there have been 1.66 million loans approved.
So one has to assume that this money is getting
to at least some hands that really need them.
If you look at what the SBA is saying
that this supports more than 30 million jobs,
that's promising.
If you take that at least at face value.
- On the PPP website they say that June 30th is
an important date.
Can you talk about what happens on that date
and what small business owners should know about it?
- June 30th date
is tied to the loan forgiveness element of the program,
which is far and away the most attractive
and interesting piece.
Banks are very concerned about what is...
I should say lenders more broadly are very concerned
about moving forward on loan forgiveness without really
clear guidance and there are a lot of different elements
of that.
You touched on one, the idea that you need
to have your head count back up by June 30.
We don't know what that really means
besides what the loss spelled out,
and it left a lot of things undefined.
For example, we don't know the definition
of a full time equivalent employee and how many hours
that should translate to.
I think that's one question that business owners
and lenders are really watching on.
We will need to watch these loan forgiveness requirements
very carefully.
- That right now we have a lot of small business owners
who are really struggling to keep their doors open,
what's your advice for them?
- It's never been
more important to belong to local, state
and national organizations.
I think
this has exposed the communication
and knowledge really is power here in a sense.
If you knew about PPP earlier,
you maybe got into the program earlier,
you had a better likelihood.
So I think increased communication and awareness of
these programs is critical.
- My sense is
that one of the aspects of this program
that has been particularly troubling for a lot of
potential small business borrowers is just
the paperwork requirements.
What you have to show in the initial application process
and what you will eventually have to show
for the purposes of proving
that you've maintained some amount of payroll.
So I would recommend that people be organized.
As organized as they possibly can and try to have as much of
that digitized and in some sort of a digital platform
where you can readily access it.
The funds may be running out quickly again.
But I think for the next go around to John's point,
we definitely would recommend that businesses
be plugged in, so to speak.
- And another thing that I just
can't stress enough, is just be ever vigilant of scams.
Pay attention to what your emails look like
that you receive.
Before you respond to anything, take a breather,
do some due diligence and make sure that
what you're responding to,
whoever you're giving your information to,
that you're giving it to the people you think you are.
- I'm noticing that a lot of small business owners
are taking this time to be really creative
and to really innovate their businesses.
What have you been noticing?
- It's been really interesting
to sit back and watch how small companies and businesses
in particular have really taken advantage
of this opportunity because they're forced to,
to retool themselves, to reinvent themselves
and that's been really exciting to watch.
I'm curious to see how this all plays out at the end
of the day.
- We have seen
10 years of digital growth in 10 weeks,
and I think that's gonna be one of the stories that is
so fascinating.
It has been a game changer for the businesses
that found a way to get online.
I was talking with a doctor's office today,
who never had any intention to get into telemedicine
and telehealth, and now is seeing patients virtually
and has revamped their website in order to be helpful
to patients.
I think that may be one of the underlying stories.
When all of this has passed,
we will have seen a transformation of our economy
and an acceleration of what it means
to be a digitally fronted business.
- It was really great to talk to you all.
Thanks so much for your time, for your wisdom,
for your energy, and I hope you stay safe
and well during this time.
I hope you found some value from this roundtable today.
I know that the PPP is constantly changing
and there's so much unknown and a lot of information.
I am sure that some of you still have questions
so I encourage you to leave comments below,
and if you need some resources or more information
you can go to OpenWeStand.org and subscribe to this channel
to keep up to date.
Until next time, I hope you stay safe and well.
(upbeat music)