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PPP Loans Largely Effective for Small Businesses, Many Need More Help, Survey

July 13, 2020, 07:15 AM
Filed Under: Industry News

The NFIB Research Center released a survey updating the state of small business and financial assistance programs, including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan program (EIDL).

“Small businesses have been using the PPP loan program to help keep their doors open and keep staff on payroll,” said Holly Wade, NFIB Director of Research & Policy Analysis. “However, many small businesses are telling us this won’t last forever and anticipate having to lay off employees once they’ve used their loan.”

Key findings from the survey include:

Eighty percent of NFIB members have reported applying for a PPP loan.

  • Over half (56 percent) of PPP borrowers have spent all their loan funds with the remaining 44 percent likely not far behind.

The 24-week extension for the PPP loan forgiveness period is widely popular among small businesses, with 59 percent of borrowers opting for the added time to use their loan.

  • Thirty-eight percent kept their original 8-week forgiveness period.

Applying for loan forgiveness is the last step in the PPP process for many, just over half (55 percent) of borrowers have not yet submitted their application for loan forgiveness.

  • Thirty-eight percent of borrowers are on hold to apply as their lender has told them they are not accepting applications yet. Lenders are still waiting for instructions from the SBA on how to process forgiveness applications.
  • Regarding the two forgiveness application forms, 62 percent of borrowers do not know yet if they will be able to take advantage of a simplified form or if they will have to fill out the longer application form.

The PPP has largely fulfilled the goal of supporting payroll to keep employees connected with their jobs. However, for many small businesses, current economic conditions will force some to adjust their employment levels after they’ve spent their loan.

  •  About 22 percent of PPP loan borrowers have or anticipate having to lay off one more employee after using their loan (up from 14 percent in mid-June).

Just over one-third (34 percent) of small businesses have applied for an EIDL loan, generally unchanged since mid-April.

  • About 67 percent have been approved for an EIDL loan and 7 percent denied, with 26 percent still waiting to hear one way or another.
  • Just over half (55 percent) of applicants report their EIDL loan has been deposited.

Of the small businesses that have applied for a PPP loan, an EIDL, or both, 46 percent anticipate needing additional financial support in some form over the next 12 months.

  • Forty-seven percent of small businesses have been impacted by new changes in re-opening policies, adding to the volatile economic conditions from the pandemic.

Economic conditions are still challenging for most but less so than a month ago with about 45 percent of respondents reporting their current sales volume is 75 percent or more of pre-crisis levels (up from 28 percent from May).

  • Eight percent reported their current sales volumes as 1 – 25 percent of pre-crisis levels, 18 percent report sales between 26 – 50 percent of pre-crisis sales levels and 27 percent between 51- 75 percent of pre-crisis levels.

Some states and many cities require face coverings before entering business establishments. About 53 percent of small business owners require employees and/or customers to wear a face covering.

  • Forty-six percent of owners find it difficult to enforce the practice of wearing a face covering.

The biggest challenge for small business owners is being able to stock up on hand sanitizer for their business with 23 percent of owners reporting that it is very difficult to stock up on the product.

  • Another 36 percent report finding it moderately difficult to stock up on the product.
  • 1-in-10 small business owners find it very difficult to stock up on face coverings and another 30 percent find it moderately difficult.

Getting customers back into businesses is proving to be difficult for 11 percent of owners with another 29 percent saying that it’s moderately difficult.

  • Many owners are also finding it difficult to manage employees’ and customers’ health and safety concerns with 37 percent finding the former and 32 percent finding the latter very or moderately difficult to manage.

Economic conditions are dire for about 4 percent of owners who say they will only be able to survive for no more than one to two months.

  • Another 19 percent report being able to operate for 3-6 months. About one-in-five anticipate being able to operate for 7-12 months in the current environment and 57 percent are less financially stressed and are able to operate for more than 12 months.

The full survey is available here.

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