Loans – Demand for PPP loans is lower than for the first round. That’s good news and bad news.
“This is not going to be the answer for a lot of businesses now that we’ve been through two pretty significant shutdowns. 60 percent of payroll costs is not really where their pain point is,” said Andrea Mosher, senior vice president of lending solutions for Brighton-based Lake Trust Credit Union. “If people want to work, there are jobs. People are choosing to not work right now, and businesses didn’t have sales. That’s where they’re hurting.”
Business owners are also reporting a relatively easier time obtaining loans compared to last spring.
Ann Arbor resident RuthAnn Church owns and operates Artisan Coffee Imports. The company imports coffee from woman-owned farms in Africa and sells to roasters that want high-end, specialty coffee.
Church, who started her company in 2009, received a $6,900 PPP loan last spring. The process was a hassle, she said, as her usual banking institution in Ann Arbor had no knowledge of the program. Church later found a credit union out of Romulus, with some assistance from the Small Business Association of Michigan, that would serve her, even without a membership.
The second time around, Church’s home credit union, the University of Michigan Credit Union, was prepared to assist members in applying for PPP loans.
“Now I’m on my way to my second loan,” Church said.
The process is running more smoothly the second time around, according to Michigan Bankers Association Advocacy Manager Alex Morris. Morris said he believes the demand for the funds has decreased a bit, adding that small business owners across the state may be doing better financially than they were last spring.
“We don’t have an indication of how much money is left in the fund at this point,” Morris said. “But we hope to know (soon). There’s less of a need there, but there are plenty of needs to be met.”
Morris on Monday said he’s run into a few businesses that have seen a second round of help held up. There are some businesses that still have not received funding applied for last spring. The Small Business Association, Morris said, will not issue aid for a second round of PPP funding to an applicant until it receives money it applied for last spring.
The S(BA), which administers the program along with the U.S. Department of Treasury, last reported PPP data last week, following the initial roll-out that was limited only to certain community-focused lenders. During that first week, the S(BA) said that it had approved approximately 60,000 PPP loan applications submitted by nearly 3,000 lenders, for more than $5 billion.
Despite a lesser velocity and somewhat lower demand for loans compared to last year, bankers say the newest tranche of dollars comes as they continue to work on getting loans forgiven for clients from the first PPP, something that is “definitely” creating headaches, said Mosher with Lake Trust Credit Union.
“(The S(BA) has) continued to make changes to the forgiveness process and are doing that in the process of releasing another round of funding,” Mosher told Crain’s. “It has created confusion for business borrowers. There are a lot of business borrowers who don’t understand all of the caveats of the forgiveness portion.”
-Crain’s reporter Jason Davis contributed to this report