We’re deeply committed to ensuring that small businesses have the support they require.
President Donald J. Trump
I can’t help but ponder this statement and the reality of what 3 weeks makes. Let’s take a look at the reality for real small businesses like myself, my clients and local businesses that we all know and love.
The Paycheck Protection Plan (PPP), was highly touted as a program for small businesses to get money for 2 months of payroll + a little extra for rent and utilities. Although these funds would be initiated as a loan, the loan would be forgiven if at least 75% of the funds were used for payroll. Yeah, finally help for the businesses that really need it. Small businesses get to keep their employees employed and pay some of their overhead costs. Too good to be true? I was skeptical at first but did tons of research and determined that it was in fact real and my clients were eligible!
As the owner of Local Ledgers LLC, a bookkeeping company focusing on small businesses, this gave me hope as our mission is to help our clients survive and grow. This could be the lifeline that most of them needed. My team and I spent hours gathering data, keeping up with the daily changes regarding the program. When the start date arrived we were up early, logging into our clients’ different banks to see when their sites started accepting applications. We were waiting with the data that might be requested, every bank was different so we had to be ready. We were ready to pivot and research different options for our clients if they needed a plan B. Plan B was needed when Bank of America said that they would not accept applications from their own customers unless they had a credit card or loan with them as well. Leaving several of their long term Bank of America customers without a lender.
We all know that hard work pays off and we were determined to get these monies. A little over 2 weeks later, zero of our small business clients have funded. True story. The program ran out of money only a few days after starting accepting applications.
Like many of you, I had to ask, “were any ‘small businesses’ helped by this program with funded loans?” Through my accounting network, I have heard of very few businesses that were funded but I did hear that Ruth Chris Steakhouse, Potbelly and a few other corporate franchises with 100’s of locations and thousands of employees were funded. (These are only a couple public companies that had to disclose this. I would love to see the list of privately held companies that were funded but don’t have to disclose.) How can this be true? This program was for “small business owners with fewer than 500 employees” which in my opinion is pushing the ‘small business’ definition already? Answer: the rules were morphed into allowing companies to apply if they had fewer than 500 employees per location. What??? How is that a small business?
My clients are true small businesses that employ fewer than 15 employees, most have just a handful and were only asking for $20,000-30,000. These businesses are relevant, add flavor and life to our communities and also provide a significant number of jobs.
Small businesses are an anchor of the US economy.
48 percent of all US employees work for small businesses, down from 52 percent in the early 2000s. 18 percent of all US employees work for businesses with fewer than 20 employees. Small businesses accounted for over half of net job creation in 2014.
-J.P. Morgan Chase
Ruth Chris Steakhouse, Potbelly and Taco Cabana were all funded through Chase. That solves the mystery as to why we couldn’t get an application submitted or even acknowledged by Chase, they were busy with the bigger fish. Why did these banks appear to give priority to these big fish? The program allowed for an “agent” fee of 1% of the loan. I naively thought that Local Ledgers would get this fee for the loans that we helped our clients get. We would do it for our clients without the fees but as a small business myself, these fees would be helpful. We learned immediately that none of the applications that we submitted even had a space for our name, so clearly we were not getting any fee. I am guessing that Chase submitted their names on the applications for Ruth Chris Steakhouse, Potbelly and Taco Cabana.
Let’s just look at the math. Ruth Chris Steakhouse had a net income of over 41M in 2018 and 14.5M in Q4 of 2019 alone. In 2018, Potbelly had a net income of over 153M. I find it hard to believe that their bank accounts are running low and if they are I know several small business owners that could give them a lesson on frugality and cash management which is essential for small businesses. Why can’t they use some of this money to help their employees? It seems logical to me. Save money for leaner times.
My clients are skipping their own paychecks and dipping into their personal savings to pay the wages of their employees, because it is the “right thing” to do. Are they sitting on piles of money? Absolutely not. But they care for their employees and they feel like they owe it to them. These are hardworking people who we all rely on for food, products and everyday life experiences.
I find something fundamentally wrong with big corporations who relish and tout huge profits when times are good but when the economy struggles, they work all their angles ( with a highly paid corporate staff very experienced in just how to do it) to be the first in line to get aid. True small businesses that we know and love, save money in the good years to pay for lean years. Why do we not require this out of big businesses? Maybe I am naive but I will continue to choose to do the”right thing” and work hard for my clients and other small businesses so that they can survive and continue to work their tails off to follow their dreams, by serving their customers and providing jobs for people in their communities.
When we come out of this, do me a favor and pay attention to where you spend your dollars. Vote with your dollars, as in any election, your vote counts. It gives validation and support both financially and emotionally to the true small businesses that are around us. Fight for them! They need you!