After several very harrowing weeks, the ongoing drama of the Paycheck Protection Program (PPP) seems to have finally come to a close.
As Ingo Money CEO Drew Edwards noted in the most recent digital discussion between himself, Karen Webster and Dan Speight, CEO at Planters First Bancorp, the time for small- to medium-sized businesses (SMBs) to seek PPP funds is, for all intents and purposes, over. That’s despite the fact that there’s still roughly $150 billion left in the fund for potential distribution.
“I think the time has passed,” Edwards said. “I think businesses at this point have kind of got a plan and they're feeling OK — like they can get through this or they're filing bankruptcy or they're bailing out. … Even smaller businesses, by now they've either given up or they've got a plan, and this money at this point has too many strings attached to it.”
Speight concurred, noting that although his bank had already decided not to offer any additional PPP loans beyond those it had already processed, it hasn’t seen any interest from SMBs about whether getting one is still possible.
“I think the feeling is anyone who needs it has gotten it, and many have just decided not to get it,” he said. “And maybe some of that was with chilling effect that we had discussed, though I think that some of the clarification we got in the last couple of weeks probably should have taken a little bit of that risk off the table.”
However, just because the PPP’s distribution phase has likely run its course, Edwards and Speight noted that the work is not quite done yet. Speight said banks still have to submit the loans for government forgiveness. And there remains uncertainty regarding whether the underwriting terms will see adjustments.
Beyond the PPP itself, there is the goal the program aims to pursue: helping SMBs — particularly Main Street SMBs — hang on long enough for the economic recovery to get underway. With a ground-level view from Georgia, the nation’s first state to reopen its economy, both Edwards and Speight had some ideas on “what it will take for Americans to emerge from their rabbit holes,” as Edwards put it.
Cleaning Up The Last Few PPP Loose Ends
According to Speight, in the two weeks or so since the panel’s last digital discussion, banks have gotten some “fairly good guidance” on how to guide businesses about PPP loans. The challenge now will be for SMBs to properly gather and certify all the information necessary to qualify for forgiveness on their loans, he said.
What’s required is likely a bit more complicated than what SMBs are prepared to handle, and many will either need professional or bank help to get it right, according to Speight.
Among recurring concerns is that SMBs might not have enough time to spend all the allocated funds properly before the two-month deadline expires. Speight said such a worry is just one of the program’s many up-in-the-air elements at this point.
There have been talks of extending the two-month deadline in light of how the crisis has gone well past the two-month time frame first envisioned. There’s also talk of changes to how the money has to be spent in terms of what exact percentages need to go to which expenses for businesses to qualify for loan forgiveness. At the moment, though, it is all still just talk.
On the upside, Speight noted that those changes could potentially help SMBs extract more usefulness from the PPP funds and get themselves on stronger footing for recovery.
“The negative side for the bank is uncertainty about what the rules are going to be,” Speight said. “When we entered this program, we entered into this under a certain set of expectations about how things would be and how [the funds] would be used and paid back. And so, extensions and changes like that could affect us and our balance sheet as well.”
But he noted that over the next few weeks (or even in the event of another round of stimulus funding), those final loose ends will all head to a resolution one way or another.
Edwards agreed that SMBs aren’t so much thinking about their plans around getting PPP funds anymore. Now they’re just trying to find their way down the road to recovery — and how to bring consumers along for the ride.
Getting Consumers Out Of Their Rabbit Holes
Georgia was one of the first states to begin pressing forward with a reopening plan, and from Edwards post in the Greater Atlanta region and Speight’s on the state’s coastline, consumers are indeed coming back. They’re going out to eat and exercising more in public places like parks.
Edwards said he thinks that’s mostly good, although he noted there will be some public health risks associated with consumers getting back out into each other's presence again.
“What's 100 percent for certain is that if we stay in our rabbit holes, we're going to have irreparable damage to our economy,” he said. “So, what's the difference between braving the new world now versus waiting to do two months or three months more damage?”
Speight concurred, noting that in the coming days, his bank is getting set to reopen its lobby for what he called “a very soft, unannounced opening.” They have all the personal protective equipment (PPE) ready to go and are never going to be more ready than they are right now.
“It’ll be interesting to see how [many] people show up and if they really want to come in — or if they decided that it's easier and safer and feels better to do business in a different way,” he said.
And that, both agreed, is going to be the key question that consumers will be answering over and over again throughout the recovery.
When consumers start to “come out of their rabbit holes,” what will they do? What will they go back to and what new habits have they developed in the burrow that they plan to stick with?
Edwards said consumers will come back; he’s already seen them eating in restaurants. But he noted that they won’t come back in the same ways. They’ll favor distance more, seek outdoor-oriented activities and will adapt their habits to their personal safety preferences and needs.
That means businesses large and small that serve them will likely face a lot of changes as well. Some, both Edwards and Speight noted, probably aren't going to make it.
But Speight said that what’s encouraging is that in this phase of the recovery, he can’t name a business that his bank is worried about.
“It's really hard going through our portfolio today to say: ‘Gosh, we know these three or four aren’t going to make it,’” he said.