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Solution Providers Demand More Funding For ‘Bungled’ Paycheck Protection Program
‘The government has forgotten the working people on the street,’ says All Solutions CEO Nalit Patel. ‘They have not shown any empathy, compassion or sorrow for the mess that has been created.’
All Solutions CEO Nalit Patel, who has promised he will pay his employees through the end of the year, could not be more infuriated about the failings of the Paycheck Protection Program (PPP), which just ran out of $349 billion in funds this week.
In fact, Patel, who founded the Livingston, N.J-based solution provider 30 years ago, sees the program as just another example of the federal government’s inability to help those that need it most in the midst of the coronavirus pandemic.
“The government has forgotten the working people on the street,” he said. “They have not shown any empathy, compassion or sorrow for the mess that has been created ... The whole rollout of this program was bungled. It is like someone in kindergarten put it together. There is absolutely no communication and coordination.”
The PPP, part of the federal government’s $2.3 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides loans for up to two months of payroll costs plus an addtional 25 percent for businesses of 500 or fewer employees up with a cap of $10 million. The one percent interest rate loans will be forgiven if businesses do not lay off workers.
The PPP got off to a rocky start when the U.S. Small Business Administration launched it April 3. Some lenders, already besieged by an influx of applicants, received late guidance from the government that forced them to change their applications after they had begun accepting them. In addition, the SBA’s online application portal crashed on April 6, according to reports.
Patel – who had prepared his application documents in advance – first applied on April 4 for the PPP with a financial institution he used for 27 years. “Saturday the program opened and within one hour my bank told me they had reached their lending limit and they cannot accept any more applications,” he said.
After getting shut down by his long-time bank, Patel spent the next five days applying with another bank. On April 10, he finished the application and got a request Wednesday from the bank for additional documents.
By Thursday, the SBA’s website said it has exhausted the funds allocated to PPP and is no longer accepting applications.
Patel has also been stymied in his attempt to get a loan with $10,000 in rapid initial funding through the Economic Injury Disaster Loan Emergency Advance (EIDL) program.
“I am working with 15 to 20 other companies on this, and nobody has seen a nickel,” he said. “That was a program that came out on April 4 and got revised on [April 8]. The PPP application also got revised.”
The EIDL program – which was designed to provide low interest loans to businesses with fewer than 500 employees with up to a $10,000 advance that did not require repayment – has also run out of the $10 billion Congress appropriated for the program.
Patel is one of many solution providers that now want Congress to act quickly to approve more funding for the PPP and EIDL, and also implement a better process that gets the money into small businesses like his that need help protecting jobs. “We need more funding,” he said.
Treasury Secretary Steven Mnuchin has formally requested that Congress infuse the PPP with an additional $250 billion. That funding has been held up, however, due to a clash between Republicans who want a bill just focused on PPP and Democrats who want to include funding for hospitals and states, as well as earmark some for lenders that service minority-owned businesses.
“I would fire the entire Congress,” said Patel. “They are useless. They don’t have the interests of the American people at heart. They need to do their job.”
Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla., solution provider, said he could not be more frustrated with how the federal government has handled the PPP.
“I have run up against one brick wall after another trying to get money,” he said. “There’s got to be a better way to get assistance to small businesses like ours that are being hard hit financially by the pandemic.”
Goldstein filed an initial application on April 3 with his bank of 15 years and has still not heard back on whether he has been approved or rejected. He also applied with another bank and is now on his third set of forms and still has not received an answer on whether he will receive financial relief.
Goldstein called on Congress and the President to approve more funding for the PPP. “I’m trying to save the jobs of 22 people that work for my company,” he said. “We need this funding. I don’t understand why this has to be so difficult. I filed all the paperwork and have not been able to get an answer. This has not been handled well at all by the federal government.”
Goldstein said it is still to early to determine the ultimate financial impact of the pandemic on his business.“It’s hard to know what financial hit we will ultimately take,” he said. “I’m hoping we all get back to work and the customers remember all the good work we have done for them and the community during this difficult time.”
Allen Falcon, founder and CEO of Cumulus Global, a 14-year-old Westborough, Mass.-based cloud solution provider that has been approved for PPP funding but not yet received it, is urging his colleagues that have not yet obtained funding to call their congressmen and senators to push for more relief.
“If you are a small business and you need that money and have not applied yet, you need a plan B,” he said. “We urgently need expansion of these SBA programs. I’m surprised the $349 billion from the PPP lasted as long as it did. The EIDL program was also underfunded from the start with $17 billion allocated for the program and applications totaling $383 billion.”
The SBA has clearly been overwhelmed by the response to the PPP and EIDL, said Falcon. As for the PPP, the legislation did not include a “clear set of rules” to administer the program, said Falcon.
“I think the SBA has done an amazing job of getting this program up and running, certifying banks, creating submission portals, everything required so the banks could accept and process these applications,” he said. “They are building the boat while they are trying to cross the Atlantic.”
Meanwhile, the expanded PPP funding proposal is caught in a political spat between Republicans and Democrats, said Falcon. He wants the two sides to sets aside partisanship and get the funds approved.
“The Republicans are blaming the Democrats for holding the additional $250 billion in funding up,” he said. “It is just outrageous. Small businesses represent the vast majority of employees and the majority of the Gross Domestic Product (GDP). This isn’t hard. We need legislation that funds these programs without anything else in it – no set-aside or special-interest deals. My message to Congress: Stop playing politics and provide much-needed funding for these programs.”
Congress needs to understand that nothing less than survival is at stake for many small businesses that need the funding, said Falcon, who would like to see $250 billion for PPP and another $500 billion for EIDL. “My CFO and I are running scenarios that say what happens if 30 percent of our customers don’t survive. That is not out of the realm of possibility.”
Falcon said he has seen some estimates that if all businesses that qualify applied, it would require $2.7 trillion in funding. He is advising partners that have not yet applied for assistance to get their paperwork in order. “If partners don’t have a relationship with an SBA lender, now is the time to ask their current banker for an introduction to someone so if and when the program gets more money they have someone they can submit an application with that knows them,” he said. “Relationships are really important at this point in time.”
Falcon applied for the PPP on April 3 and then had to reapply on April 6 because the application was changed. “We had to redo all our supporting paperwork because they changed it,” he said. “Our final application was given to the bank on April 6. We received our approval notice at 8:30 PM on April 11.”
Falcon said it is cloud solution providers like Cumulus Global that are essential to bringing back the economy with digital transformation for small and mid-sized businesses. “Solution providers like us have a responsibility and opportunity to help businesses transform and rebound strongly from this pandemic,” he said. “That means helping our customers leverage the capabilities they already have in place but are not fully utilized.”
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 101 on the CRN 2019 SP500, applauded President Donald Trump and the Congress for coming to the aid of small businesses.
“You have to give tremendous credit to our president and the federal government for stepping up and putting these programs together to help support the American small business, the American people and everyone that has been impacted by this pandemic,” he said. “Look at all of the other countries impacted by this. We are by far the one that has done the most to fiscally support our businesses and taxpayers to the tune of trillions of dollars. That would only happen in America. Things are never going to run smoothly in a situation like this. But we should be thankful they stood up and protected us with this great way of life we are all used to. There may be naysayers that say they have not done enough. But our country has done more than any other country. We should all be thankful, understanding and patient.”
Venero said he is confident there will be additional funding for businesses. “We are going to see additional funding that will help,” he said. “I give President Trump credit for fighting to get American small business and taxpayers as much relief as he could. I am sure he will fight that fight again.”
Venero said in his 24 years in business he has piloted his company through the financial meltdown of 2008, the dot.com bust at the turn of the century and the Sept. 11 terrorist attack. “This eclipses all of those combined,” he said. “You have people that aren’t working. It’s a situation of do you work or do you die? There is a global supply chain impact which is a financial disaster, and then you have the medical industry on its knees dealing with this pandemic. But I still have confidence and faith in the American people, our government and our president. We are going to get through this.”
Patel, for his part, said it is essential that more funding reach small businesses like his own. If help is not forthcoming, he expects a blizzard of corporate and personal bankruptcies. He expects as many as 50 percent of MSPs could be forced to file for bankruptcy if further assistance is not forthcoming. “We have customers that haven’t paid for several months,” he said. “This is a dire situation.”
Patel said even with the financial fallout he is determined to provide a safety net for his employees and their families. “Me and my family have personally put in a sizable amount of my personal money to make sure my employees and their families have a safety net and are protected until the end of the year,” he said. “I have told them they don’t need to worry about their jobs. I’m telling them that we will survive this and come out stronger and more resilient on the other side. We are all in this together. United we stand, divided we fall.”