We are moments away from being able to access our stimulus money from the CARES Act Payment Protection Program, and I don’t want you to miss out. The problem is there might not be enough money. CNBC has already stated there is speculation that all of the money will be claimed by end of day Friday 4/3/20 or by the end of the first week.

Does this feel wrong to anyone else or has law school just made me good friends with Lady Justice? Isn’t it weird that we are supposed to act quickly, or we risk missing out on our portion of the stimulus altogether?

What to Apply For + The Details

Before I get into my fairness assessment, I want to make sure you grab the money that is yours. I’m encouraging small business owners to apply for both 1) the EIDL and 2) the PPP. Some people have been misinformed stating you can only get one or the other, not true. The truth is you can only get one of each (meaning you can only get 1 PPP loan, not 2 PPP loans). The EIDL application is live online here. The PPP becomes available Friday 4/3/20, and you apply with an SBA approved lender that is offering the program. If your bank offers the program that will be your fastest way to access the funds. If it doesn’t, you may have a tougher time because some banks are only offering the program to existing customers. Fundera is stepping in huge here by offering a free service to submit the PPP application to its network of lenders. You can apply through Fundera here or Kabbage here, and they will get you situated.

If you apply to both SBA programs you must distinguish in the applications that the funds will be used for different purposes. Each program also has a portion that will be a grant. The EIDL grant portion is the immediate cash advance of up to $10k that you may be offered. If you qualify you should get that money in about 3 days. Make sure you check the box that says you want to be considered for the advance. The PPP grant portion is the amount of money that will be forgiven if it was used to cover payroll costs, mortgage interest, rent, and utility payments over the 8 weeks after getting the PPP loan.

Download the free PDF we made for you to help navigate COVID-19 lending here.

A Critical Analysis: Issue of Fairness + Banks Getting a Cut with No Risk

Now that you have a plan of attack on how to get your money, can we talk for a minute about fairness? It doesn’t seem right to me that the stimulus is on a first-come-first-served basis with a risk that the money may run out if you wait too long. All the while, the banks are cashing in on this stimulus with no risk.

It’d be interesting to do a deep-dive on what the Constitution might have anything to say about this program in regard to equal protection, the due process clause, and the federal government’s spending power.

The US Treasury says that “The Paycheck Protection Program authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crises. All loan terms will be the same for everyone.” In plain English, they are providing financial support to businesses in need because of the crisis. That definition sounds similar to the definition of welfare, especially because a good chunk of the money will be given with no obligation to be repaid. Merriam-Webster defines welfare as “aid in the form of money or necessities for those in need.”

Here’s the main issue: If you meet the program criteria for who the stimulus is for, shouldn’t the money be guaranteed to you? Isn’t it unfair that you might not get your portion of the stimulus just because you didn’t apply soon enough? What about the person that doesn’t have a computer or reliable internet, why should someone else get their money? What if certain bank’s websites crash leaving all their customers on the sidelines while other banks use up the available $349 billion? The government has said they don’t believe the money will run out, and they have said that more money should be made available if the money runs out, yet the narrative remains: apply right away, first-come-first-served.

Isn’t stress the last thing you need right now? The government could say so long as everyone that matches the criteria applies by June 30th, they will be guaranteed to receive their allotted relief per the terms of the program. Yet we are left with the government racking up debt, printing money, and debasing the dollar, all done in the name to help us, but we may not even receive that help.

On top of not guaranteeing you will get your allotment, the government, by way of the SBA, will pay the banks a processing fee based on the amount of the loan. The fee will range from 1%-5% of the loan balance issued. The SBA is guaranteeing the loans 100%, so the banks take on no risk in issuing the funds. The program as of now is $349 billion, so banks across the U.S. will make on the low end $3.49 billion (1% fees) up to $17.45 billion (5% fees) from the PPP stimulus program. There may be a compelling reason, but it makes me wonder why the banks are involved at all. Maybe the government needs assistance processing loan apps or wants to access the capital of the banks, but the government has proven with different programs that it can go to the people directly. The EIDL Loan is processed by the SBA directly, the relief checks expected to go out to all Americans will be direct deposited or a check will be sent, and Social Security payments are made directly to qualified recipients. I’m not saying the use of the private sector to help facilitate the stimulus should be prohibited. I would love to see companies like Square, PayPal, Shopify, and Stripe that we all rely on for payment processing be utilized to get us the money tomorrow instead of having to go through traditional slow moving banks that don’t need additional support from the government. In fact the payment processing companies I just mentioned have been trying to convince the government that they can get us the money quickly and seamlessly, yet the government has boxed them out thus far.

Go get your money. I hope the money doesn’t run out, and there is enough to go around for everyone that matches the criteria.

Would you also tell us the obstacles you run into and also share your success stories?

We are all in this together, so any information you can share regarding your applications, what banks you applied through, and what banker you recommend might assist others to get their money is all helpful.

Here to be a resource, sounding-board, critical analyst, and voice for business leaders.