Small Business Administration's Paycheck Protection Program: Take two

By Danielle Masterson contact

- Last updated on GMT

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Getty Images

Related tags: coronavirus, Small business

The last coronavirus relief package that was meant to ease the loan process for smaller supplement firms was largely deemed a disappointment by many. Now a new deal has been struck in the Senate, with the House expected to vote as soon as Thursday.

Senate Republicans and Democrats reached a deal on Tuesday for additional funding for the Small Business Administration's Paycheck Protection Program. The bill includes over $480 billion in additional coronavirus relief. The House could approve the bill as early as Thursday.

Numbers

The $484 billion relief bill is aimed at replenishing small business loans, fund hospitals and testing. The new package includes $310 billion for the Paycheck Protection Program (PPP), with $250 billion refilling the program and $60 billion set aside for smaller institutions like credit unions and community banks. 

The centerpiece of the new legislation is the $310 billion which will go toward the PPP, a key feature of the first relief package, which was plagued with issues from the onset.

While the PPP doled out 1.6 million loans, the money didn’t go far with America’s 30 million small businesses. The $349 billion pool of funds was drained after a few days of going live.

Adding insult to injury, several large publicly-traded restaurant chains like Potbelly Sandwich Shop, Shake Shack and Ruth's Chris steakhouses received these emergency loans.  Following backlash, Shake Shack said it would return its $10 million PPP loan. 

While the loans didn’t serve some mom-and-pop type natural product businesses well, US Securities and Exchange Commission filings from publicly traded companies did disclose that New Age Beverages Corp made off with $6.9 million in PPP loans. The producer of teas, liquid dietary supplements, and CBD topical products, has 934 employees and is based in Denver. But this is not the case for many. 

Rejected

A new survey out from the Natural Products Association (NPA) revealed that 95% of natural products businesses who applied for PPP loans were rejected. 

The survey included 69 respondents in the natural products industry, comprising both members and non-members of the NPA. 

The average loan requested by respondents was $145,354 and ranged from $6,000 to $1.5 million.  The total amount of loans requested by respondents was $8,285,186. 

Despite the problematic first round, 88% of respondents signaled they would reapply for a loan once additional resources are made  available. 

“Our members have stayed open as essential businesses but have clearly not been immune to the shock of this crisis,” ​said Daniel Fabricant, PhD., president and CEO of NPA.  “As the country moves toward reopening in the coming weeks and months, we must ensure that health food stores and supplement manufacturers play a role in the rebuilding process and continue to provide Americans with products that support their health.  We look forward to continuing to work with the Administration, governors, and lawmakers during this crisis and recovery.”

Cozy with banks 

Banks were supposed to process PPP applications on a first-come, first served basis.

However, four major US big banks have been accused of prioritizing their more profitable customers in order to make more money. 

Fabricant told us that the banks playing favorites has certainly raised some concern. “It was supposed to be complete open access. Hopefully this second round will take care of that.”

NutraIngredients-USA​ reached out to the Small Business Administration to find if this round of funding will address such issues. Press Director Carol Wilkerson said SBA can’t comment on pending legislation.

Locked and loaded 

Speaking on background, one industry stakeholder told NutraIngredients-USA, “Our paperwork is in, we know that it's ready to go, our banker of 25 years said the minute this new deal is cut, we hope to have your application funded. He said no guarantees, but you're right there in the queue and the minute we get the money, we’ll let you know. And that seems to be the story for many.”

Fabricant said the best defense is preparation. “Folks who have put in and didn’t get it should be prepared to go at it again. And maybe go at it with more than one bank if that’s an option or even use a broker because it seems that there was certainly a run on the processing of these.”

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