70% of Kansas Small Businesses Applied for PPP Loans & Nearly Half Applied for EIDL

Date: April 14, 2020

Nearly two-in-three successfully submitted PPPL applications, but none have received EIDL emergency grants

The severity of economic disruptions in the small business sector is quickly increasing the immediate demand for financial assistance among small business owners. NFIB’s Small Business Economic Trends survey highlighted the rapid decline in the small business sector with the largest monthly decline in small business optimism in the survey’s history. The economic impact of the COVID-19 outbreak and associated policy responses has negatively impacted 90% of small business owners.

The NFIB Research Center’s latest survey focused on the two main COVID-19 related small business loan programs. The survey highlights the strong demand for financial assistance among small business owners and how owners are navigating the initial rollout of the two loan programs. The two loan programs are the Paycheck Protection Program (PPP) created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Economic Injury Disaster Loan (EIDL) that was expanded and funded through the Coronavirus Preparedness and Response Supplemental Appropriations Act. Both loan programs offer generous eligibility to help support most small business owners. However, the programs have yet to deliver the loans, frustrating small business owners who are in immediate need of financial support.

In Topeka, Patti Mellard is feeling hopeful. Today, her small business, Key Staffing, received money from the Paycheck Protection Program. That means she can hire back some of her staff. Three weeks ago, workers in Kansas were told to stay at home unless they were deemed essential. Overnight, Mellard was forced to lay off one third of her client’s temporary workforce.

 

Mellard chats with one of workers at Key Staffing in Topeka. Mellard was forced to lay off seven of her full time workers.

 

“That just crushed my business. On top of my clients’ workers, I had to lay off seven of my full-time employees. I never thought that after 31 years in business, I would be forced to start all over again,” said Mellard.

It’s been a stressful few weeks for Mellard, to say the least. On top of the confusing and frustrating process of applying for federal loans and grants, Mellard has been inundated with new government regulations surrounding new mandates such as sick pay and confusion over what documentation she needs to keep and where it needs to be sent. To make matters worse, Mellard’s office was broken into last week. Mellard needed some good news and was relieved when today she received the money from the PPP loan program. She plans on hiring at least one of her full time employees back and hopes to add more temp workers for her clients as Kansas’ stay at home orders are lifted. When they are, so hopes to have a full portfolio of Kansans ready to work.

“I’m using this time to market to new customers. Some businesses are still hiring during this time of uncertainty and I’m going to make sure they have good people to fill those jobs. Let’s keep the economy rolling. Thanks to the Paycheck Protection Program, I can keep my business afloat during these uncertain times.”

“Congress promised to get small business the capitol they need to keep their business running in a timely manner. So far, that has not proven to be true. Patti Mellard is the exception, not the rule,” said NFIB State Director in Kansas, Dan Murray. “Time is running out for our small businesses here in Kansas who have been forced to close or reduce their services. If they don’t get money now, many will not recover. NFIB urges Congress to get our hard-working small business owners some relief before it’s too late.”

The new PPP loan program gained strong interest among small business owners and has been widely advertised in the news, by the Administration, and advocacy groups including NFIB. The vast majority (93%) of small business owners are familiar with the program. About 70% of small business owners tried to apply for the loan with varying degrees of success. Of the 30% who have not actively tried to apply, one-third of them plan to in the next month and 36% are considering it.

About 72% of those who tried to apply for a PPP loan were successful in submitting their application. However, some banks are pre-screening applicants before having them fill out the full application, so it is unclear how many have successfully applied or have just completed the first step in a longer process. Twenty-eight percent of small business owners were not successful in applying for a PPP loan.   

The vast majority of small business owners (84%) who successfully submitted their application have a checking or savings account with the bank. Just under half of successful applicants have an active loan with the bank and another 24% have a business credit card associated with the bank. Only 1% of successful applicants applied at a bank with which they had no previous association. Most banks that are participating in the program and facilitating these loans are only taking applicants from current customers.

Of the 28% of small business owners who were not successful, most of them (68%) are waiting for their bank to start accepting PPP loans. Nine percent of them are not able to find a participating bank, which is likely due to their own bank not participating. Five percent of owners trying to apply for the loan were told by their bank that it had hit their limit of accepting loans. This issue may have been eliminated on April 8, 2020, with the regulators allowing Wells Fargo to exceed their previously placed cap on loan origination. Another 5% found the process too complicated to proceed. 

The survey also asked about participation in the SBA’s Economic Injury Disaster Loan (EIDL) program. The EIDL program is slightly less known among small business owners than the PPP loan program with three-fourths of them familiar with the EIDL. About half of small business owners have applied for an EIDL loan, 45% have not, and another 5% tried but the SBA website was not working at the time.

Almost all those who applied for the EIDL loan requested the emergency EIDL grant of up to $10,000. The design of the emergency grant was to provide immediate financial assistance as the full loan was being processed.

Of those who applied for the EIDL loan, just 4% have been approved and 1% not approved. Most applicants of the EIDL have yet to receive an update on the statues of their application and no small business applicants have received the loan or the emergency grant.

About three-quarters of small business owners found the EIDL application process generally easy, but they are growing increasingly frustrated with the processing of these loans and a lack of communication about when they can expect to receive money if their loan is approved. Ten percent of applicants found it difficult submitting the application online due to technology issues related to the SBA website and another 8% had problems filling out the application.

Both the EIDL and PPP loans are of great interest to small business owners with large numbers of them applying for one or the other and often both. The financial need is immediate and small business owners are now in a holding pattern, waiting for their loan as economic conditions worsen for many.

Methodology
This survey was conducted with a random sample of NFIB’s membership database of about 300,000 small business owners. The survey was conducted by email on April 6-7, 2020. NFIB collected 884 usable responses. 

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