Payment Protection Program: First-Hand Account on Application Process
April 14, 2020
The SBA’s $349 billion Paycheck Protection Program (PPP) is providing loan assistance to businesses with fewer than 500 employees. The program, part of the larger federal CARES Act, is meant to help businesses cover expenses such as payroll, mortgages, rent, utilities, and debt.
If you’re considering applying for a loan for your business, hear firsthand about the process from small business owner Eric M. Hansel, president of Expert Lighting Group. Hansel shared his experience applying in a Q&A with the Detroit Regional Chamber below.
Related: Paycheck Protection Program Break Down: How to Secure Funding
Related: SBA Paycheck Protection Program Loan FAQ
Q: How has your business been impacted by the COVID-19 crisis?
A: We have been dramatically affected. My company works on reducing energy consumption in existing commercial buildings. In short, many of those buildings are now sitting empty or reduced from multiple shifts to a single shift of work, reducing their usage. Because of this pandemic, companies are now focused on finding strategies to survive, not take on a spend that may take multiple years before it pays for itself.
Q: What specific SBA relief made sense for your business?
A: Both the PPP as well as the Economic Disaster Relief Program (EDRP). The PPP allows me to keep my talented employees in-house while waiting for work to resume or for us to find new projects, something that typically takes multiple months.
The EDRP provided us a business loan at a very attractive rate. Based on our company financials, we were able to secure a very attractive amount, allowing us to shift our company strategies as the “new normal” is defined as we come out of this pandemic.
Q: How did you make this determination? Did you have an advisor?
A: I worked very closely with our company accountant. Both loans made perfect sense for where my business is at this point in time.
Q: How long did the application process take? Did you apply more than once?
A: The initial application of the EDRP was cumbersome and took me and my accountant over four hours to complete. The revised version was very simple, easy and went very smoothly. A third application was required Friday, April 10. I quickly completed that (very simple) and an amount equal to the number of employees I have was deposited in my business checking account Monday, April 13.
The PPP loan took five times back and forth with my bank. However, I have a very good relationship with them, having both a business account and a line of credit with them. Finally, I received an email on April 13 that the loan was approved and has moved to the processing stage.
Q: Tell us about the details required in the application.
A: Initially, we had to produce tax records from 2016 to 2019. I also had to provide payroll verification from 2019. Tax ID number and answering questions about bankruptcy history, citizenship, criminal record, etc. were asked on each application.
Q: How long was the waiting period from submitting your application to receiving your approval?
A: Once the back and forth was done with the bank, the PPP loan was approved within 24 hours. The EDRP took several weeks, with the loan amount given to me Tuesday, April 14, despite starting this process two weeks previously.
Q: What advice do you have for others applying for SBA assistance?
A: Work with someone familiar with applications, especially bank and government applications. I personally got caught up in language and trying to understand what is being asked. Also, don’t try to “game” the system. If you are a legitimate business, with legitimate needs, this is for you. If it isn’t, you’re wasting your time and tying up the system for those who truly need it.
Learn more at detroitchamber.com/covid19/sba-paycheck-protection-program/.