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Scores of small businesses are dashing to banks to get a piece of the second-round funding from the Paycheck Protection Program (PPP) after the initial round was quickly drained.
And while many of the entrepreneurs are scurrying for financing to help combat the coronavirus pandemic and stay in business, a new national survey reveals they are getting hardly any or just a tad of financial help from economic stimulus payments sent to citizens.
The federal government is providing individual American adults with $1,200 and married couples with $2,400. Parents get an extra $500 for each child they have under 17. Those making over $75,000 will get lower amounts. Singles making $99,000 or more and married couples with children making $198,000 get zero.
Some 55% of Americans planning to spend their stimulus checks on essential and non-essential goods will do so at big-box stores or chains, a survey by The Accent shows. A Motley Fool firm, The Ascent reviews financial products including credit cards, savings accounts, mortgages, and other items to help people make informed decisions on money matters.
In April, The Ascent surveyed 1,592 Americans to learn how they’re managing their finances and spending their stimulus checks. Some 37% of survey respondents reported they will use the checks to pay bills and 26% will put the money into savings. Just 22% of those surveyed will spend the checks to buy household necessities or non-essentials. Here is how those people said they will use the money:
- 14% will make most purchases at a local small business.
- 30% will make most purchases online.
- 55% will make most purchases at a big-box store or chain.
The results are another blow for many small businesses, including black-owned businesses, who recently have shut down or been struggling to remain open. Smaller businesses still open are dealing with hurdles like less traffic flow and other coronavirus-related issues that make operating increasingly difficult.
Obstacles for small businesses have been lingering since April 3 when the $350 billion PPP lending program was launched as part of the $2 trillion coronavirus economic stimulus package. After the funding was exhausted in just about two weeks, Congress approved an extra $310 billion in PPP loan money. The program includes forgivable loans of up to $10 million for small businesses forced to close because of the COVID-19 crisis. The loans help cover payroll and other operating costs through June 30.
The Internal Revenue Service has distributed 88 million stimulus check payments, totaling $158 billion as of April 17, the Wall Street Journal reported. More checks will be sent to Americans this month.
On May 3, SBA Administrator Jovita Carranza and U.S. Secretary of the Treasury Steven T. Mnuchin issued a new statement on PPP.
“Since Round 2 of PPP loan processing began on April 27, 2.2 million loans have been made to small businesses which surpasses the number of all loans made in PPP Round 1. The total value of these 2.2 million loans is over $175 billion. Notably, the average loan size in Round 2 is $79,000, yet another indicator that the program is broadly based and assisting the smallest of small businesses.
“The Paycheck Protection Program is providing critical support to millions of small businesses and tens of millions of hardworking Americans.”
Carranza and Mnuchin added that nearly 500,000 of the loans were made by lenders with less than $1 billion in assets and non-banks. Several firms on the BE 100s 2019 Banks list fall into that category. The lenders also include Community Development Financial Institutions, Certified Development Companies, Microlenders, Farm Credit-lending institutions, and Fin Techs. Over 850,000 loans—about one-third of the 2.2 million loans—were made by lenders with $10 billion of assets or less.
The second round of PPP funding has already surpassed its halfway point.
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