- Hey everyone, I'm Scott Shigeoka.
I'm GoDaddy's Entrepreneur-In-Residence.
I'm calling in here from San Francisco, California.
And like many of us during this time of uncertainty
with COVID-19, I am sheltering at home
and I hope that wherever you are, you are safe.
I wanna start by saying,
we're all gonna get through this together.
I know this is a very scary time for many of us.
I know for me it's brought up a lot of anxiety.
And what I know can be helpful during this time
is getting some clarity.
And that's why I'm gonna be interviewing some experts
about the issues that affect us as small business owners.
This week I'm gonna go into the CARES Act,
specifically the Paycheck Protection Program.
This is the piece of legislation
that's supposed to be helpful,
but I think there's a lot of apprehension right now
mixed in with the optimism, so we're gonna learn
a little bit more about what this all means for us.
But I wanna start off by saying
that this isn't financial or legal advice.
You should still continue to go to those trusted websites,
talk to your banks, and go to different
sources of information since everything
is constantly evolving.
This week I've been lucky enough to interview
three different experts on this topic.
John Stanford from the Association
for Enterprise Opportunity,
Brian Peters from the Franklin Square Group,
and Ashley Heineman who's GoDaddy's Head of Global Policy.
So John, you're my very first interview
and I'm wondering if you could just kick us off
with what is the CARES Act?
- So the CARES Act is the stimulus legislation
passed by Congress a couple of weeks ago.
- It appropriates two trillion dollars
for businesses and individuals in the United States
to help combat the COVID-19 crisis
that the country is facing.
- Part of this CARES Act, there's something called
the Paycheck Protection Program
and it has 350 billion dollars designated towards it
that will basically allow the Small Business Administration
to back loans for small businesses.
- And what's the Paycheck Protection Program?
What does it cover?
- The Paycheck Protection Program, or PPP,
is really the centerpiece of this legislation.
It's a loan program, but that's somewhat of a misnomer,
because what's so interesting about it
and sort of unprecedented is that if you use the loan
to keep employees on payroll
and maintain your normal business operations to some extent,
the entire amount of the loan can be forgiven.
- If a small business takes this loan
and can prove to the Small Business Administration
that payroll has been maintained
and that employees have not been let go,
then that loan is forgivable.
So instead of a loan, it becomes a grant.
- What's the goal for the Paycheck Protection Program
and what does it cover?
- The goal of the Paycheck Protection Program
is to incentivize small business employers
to maintain their payroll and maintain their employees,
keep them coming to work and keep the business afloat
so the people have jobs.
- It's also to pay for rent, to pay for your mortgage,
for your business, you pay for utilities,
those sorts of things.
- And who's eligible for it?
- First, you have to be a small business.
For many people, that might be five people,
but the technical regulation is that you have to have
500 employees or less.
- If you have less than 500 employees, you're in.
- Okay, next question.
Do you think that banks can actually handle
this influx of applicants?
- To be completely honest, they're not, they're not ready.
There are those that are probably more ready than others.
I think what's important to keep in mind
is that these are very interesting times,
they're unprecedented times.
It's amazing that a bill like this
was actually able to get through as quickly as it did
and for there to be a call for the program
to be up and running in that quick amount of time.
- I think the banks would've loved to have more time.
There's so much complication in banking writ large.
I don't think many of us fully understand
how the institutions are regulated.
And so, I think bankers naturally have lots of questions.
They're very concerned about major new loan programs.
So, I think it's too early to tell
if they can handle the influx.
- For the banks, there are a lot
of administrative challenges,
how to fill out the paperwork and how to submit the forms
to the federal government, whether the federal government
has systems that are capable of handling
the potentially millions of small business applications
that are going to be coming through.
I would say very likely millions of applications.
If a bank isn't making this kind of loan available,
eventually there should be a bank that you can find
that will be, make these funds available,
and down the road, there's even a possibility
that companies like PayPal and Square or Stripe,
more technology oriented companies
are going to also be able to distribute these loans.
- I'd love to learn more about the complications too.
Can you tell me a little bit more about those?
- Unfortunately, systems that come
from the federal government and work with kind of older
traditional systems are not moving as quickly
as those small businesses need.
- This is a turbulent time I think for everyone
and there's a lot of media out there
covering this massive program,
everyone knows a small business owner,
many of us are small business owners,
and so I think we all feel very personal about this.
And so, when you hear headlines like the banks
aren't lending or the agencies,
SBA and Treasury aren't moving fast enough,
we have to remember this thing only became law
a week and change ago.
How fast we're moving is causing a lot of challenges,
and again, like I said, turbulence.
- Is the PPP first come, first serve,
or will the money run out?
What do we know about that?
- It's absolutely a first come, first serve program.
I think we need to make that crystal clear.
There's 350 billion dollars set aside
and when that money runs out, it runs out.
- As I speak, Congress is already moving
to add another 200 billion to this program.
They already see the fast uptake
and the reports this morning were
that already 90 billion in loan applications
had been processed.
So, it is a question of who's there first
and moving quickly.
- So, educate yourselves as a company
as to what the rules are.
If you go to SBA.gov, there actually is a link there
that shows you what information is needed
to apply for these loans before you even go to your lender
so you have an idea.
- Are there concerns about who might realistically
get access to the funds though?
- That's one of the biggest challenges out there
for small businesses is accessing credit.
So, if they don't have that kind of partnership,
we would encourage them to look elsewhere,
work with another financial partner,
or even a newer kind of technology company
that is engaged in offering loans to small businesses.
These are potentially going to be quicker routes
to getting the credit you need to survive.
- Banks are primarily focusing on serving existing customers
and there are a few reasons for that.
One is from a natural perspective,
those are the folks who've been with them for a long time,
and it's only natural that they would
make this product available to them first.
Second, is by having customers already in the bank,
they know a lot about that customer.
I think it's important to remember
that all of this could change tomorrow,
all the conversations I've had
I always feel a little silly 24 hours later
because something I said is changed,
and so I wanna make especially clear to anyone watching this
or listening to this, the rules are changing,
the details are changing, and as we all know,
the devil is in the details.
And so, you need to be talking to your bank.
Banks are showing a little bit of latitude
about how they are interpreting it.
So you could see very different details from bank to bank
and I think that's one of the challenges
about all of the information that's out there.
- Could you tell me a little bit more
about when people should expect getting the PPP loan?
- Congress passed this law two weeks ago.
Then, the administration set up the program
to begin accepting loans last Friday,
so just six days ago as we speak.
To my knowledge, no company has actually received funds yet.
This is gonna take time for the application process
to work out.
How long?
I'm not quite sure yet.
I think everybody's waiting to see how quickly
the government and their lenders can make this process work.
- I'm also concerned that you know, in this,
these types of times, people tend to take advantage
of the situation too.
So I'm very hope, I am hopeful that people
are going to be smart, they're not going to fall
for a lot of the scams that are likely to come about
because of this situation.
Just remember that you're not gonna have the SBA
contact you directly, you're not gonna have a bank
contact you directly.
So don't fall for the fraudsters
that are gonna be out there trying to take advantage
of this situation.
So my hope is that small businesses
are gonna be smart about this
and they're gonna be able to reap the benefits
of the program, at least as it's intended to be.
- So I've gotta stress, none of this is business advice.
None of this is lending advice.
You need to talk to your banker, to your trusted advisors,
but we hope that this has been a resource for you
giving a broad overview of one of the lending programs
available to you as part of the CARES Act.
- In times of crisis, that's when the fraudsters get busy.
And it would be really important for all small businesses
to work with someone they trust.
To work with a bank that they know
or to work with another lender that they know,
which it's a Square or a PayPal or an Intuit,
those kinds of companies people are familiar working with.
Work with somebody you trust.
- If you're a business owner considering this loan,
you really need to visit SBA.gov and treasury.gov
to see the additional details about the program.
- That makes a lot of sense.
And I think I'm also wondering,
is there any hope or positivity that small business owners
can embrace during this moment of uncertainty?
- To be as optimistic as possible about that question,
I'm hopeful and I'm thankful that there is recognition
that small business is critical to the national economy
and this is literally right out the gate
is one of the top priorities of our administration.
- And so, I think we're gonna continue to see
and hear incredible stories of resilience
and that's what gives me hope and positivity,
and I think everyone can see those in their own community.
But this is, this is going to be a challenging time,
but if there's one segment of the economy
that can make this work and come back strong,
it is the small business community.
- Small businesses are a fundamental part
of what makes America great in so many ways.
That's why you see Congress moving swiftly to help out
all kinds of small businesses from a sole prop
up to a company with 500 employees,
they're trying to make as many tools available as they can.
It may not be perfect and it may not be getting off
to a smooth start, but I think
that kind of assistance is there.
- It was great talking to you, thanks so much for your time
and I'll see you soon.
So I hope this information has all been useful for you
and thanks for watching.
I know your time is really valuable.
In the coming weeks, I'm gonna be continuing
to interview experts about different topics
related to how we as small business owners
can get through this COVID-19 crisis,
and I hope you follow along.
Stay tuned to all of the information
that's coming up on trusted news sources and websites.
You can also check out #OpenWeStand on the GoDaddy website
for continuing developments as well.
Stay safe and thanks so much
for taking the time to be with us.