It is not shocking that a quickly designed program involving the federal government and mostly cautious banks has a broad range of experience for American small businesses.
Some banks are not yet set up for processing Paycheck Protection Loans, some have processed applications and issued loans, and some are nervous about legal papers they haven’t seen and worried they have bags in hand.
One thing is for sure: it helps to work with the bank that you have a business relationship with or from which you have already received loans. Some banks don’t even deal with companies that are not yet customers.
And since this is pretty much done in a digital application, the experience of online banking and dealing with a bank that is good at it makes things easier.
For example, to check payroll numbers, you can just upload 941 payroll reports or W-3 feedback when you usually keep PDFs of these things on your hard drive. The application form we saw asks about the numbers like paycheck, rent, and utilities. It asks a series of questions about a naughty history of crime or credit problems with SBA, whether you have other credits with SBA, the agency overseeing that program, and other simple questions. Give them the payroll, rent or mortgage interest, and utility costs, and then they’ll ask you to upload a list of files showing your normal payroll numbers.
It is common for your bank to send you an email indicating that you are interested in an application. The receipt of your request will then be confirmed, followed by another email with a link that you can use to fill out the online application. Waiting for approval can take hours or days. Much depends on your bank, how many customers of your bank are in line in front of you and how good your bank’s IT department is.
Go go gone
Estimates vary, but reports have reported that between a quarter and a third of the original $ 3.5 billion has been spoken so far. That means a company better get their application as soon as possible if they want. President Trump has talked about putting a few hundred million in the pot and Treasury Secretary Stephen Mnuchin has discussed it with the leaders of Congress.
But House spokeswoman Nancy Pelosi is already making noise about “fair distribution” and more aid to food stamps, so her approval is difficult to expect. Senate Majority Leader McConnell and other leaders in Congress have been discussing a simple bill that could unanimously vote for approval since most of the Congressmen are not in Washington. It may be naive to believe that Pelosi won’t screw up the works. It’s not in their nature.
Colin Woodall, CEO of NCBA, said they spoke with the USDA about some type of program specifically designed to help ranchers with these virus-related troubles. But his estimate was that any such program would be 60 days off. Meanwhile, ranchers should check out the Paycheck Protection Program if something fits into their program that will help fund payroll.
States weigh in
We interviewed various ranchers’ associations to find out how their members fared with the program.
As one of them pointed out, the benefits of the program for cattle farms will vary widely as feed yards are likely to have quite a high payroll, while calf cattle farms will have much fewer employees. Most of the questions asked of the associations concerned eligibility.
In general, compared to other government programs, the admission requirements are easier than people expect. According to these standards, this should be quick and easy.
When it comes to banking and credit, farming could have a small advantage. A recent Wall Street Journal report found that among medium- and high-risk small businesses, around half of them borrowed from online lenders rather than from large or small banks.
This means that many of them have no relationship with a stationary bank, so getting money through a bank for paycheck protection is not a good fit. Because farms and ranchers are more likely to deal with a bank or farm loan branch, they may be in a better position to get one of these loans faster.
And as long as 75% of the money is being used on payroll, getting the loan approved is usually a matter of showing paper evidence before the six months are up to make sure the money has been used on payroll, rent, utilities, or mortgage interest. Even that shouldn’t be difficult with electronic banking and bookkeeping.
Also relevant to the beef business, independent restaurant owners eager to get back on track but facing an uncertain future, have expressed a reluctance to take advantage of the paycheck protection program. Some of them are pessimistic about how quickly their business can move after a month or six weeks. If they paid people while the restaurants weren’t open, they fear that business will be slow and they won’t have the money to start paying people and vendors when the program money runs out.
Given the demand for restaurant food and drink, I’m not sure I share their pessimism. Restaurants are so busy primarily because people – especially the younger ones – either don’t have time or simply don’t want to cook. Forced to cook due to the governor’s decree, many of them are likely to be fed up with their own inexperienced cooking, let alone in a few weeks. Only college boys can live on takeaway pizza and hamburgers in the car for more than two months.
The fact that vegetable growers plow under grain and packers struggle to keep up with the demand for minced meat shows that inexperienced and inexperienced cooks cook what inexperienced cooks cook – simple dishes and casseroles made with minced meat and pasta or side dishes of potatoes. Pasta courses in the grocery aisle look like toilet paper courses. They echo. The grocery stores have rib steak and prime rib specials because inexperienced home cooks don’t often fix them and restaurants don’t order them.
So what looks like a short term stream to crank the economic pump is out there and it’s real. But sometimes a waste if you want to use it.
Steve Dittmer is a longtime commentator on the beef industry and executive vice president of the Agribusiness Freedom Foundation. The author’s opinions are not necessarily those of beefmagazine.com or Farm Progress.