The Los Angeles Lakers applied for an SBA PPP Loan and received $4.6 million. Like with the other large corporations mentioned, the Lakers have since given back their loans.
Due to the confusion within the SBA PPP Loan requirements, the SBA announced there would be increased scrutiny with loans greater than $2 million. Mnuchin, the Treasury Secretary of the United States, has claimed that any business with a loan of $2 million or greater will be audited.
Banks have also reaped the benefits of the SBA PPP Loans. With little risk in lending and ever-increasing loan amounts, banks received over $10 million in fees. Most banks did not consider the small businesses that were being shut out of the loan program.
Not only did banks gain from the SBA PPP Program, but most companies who received a loan were not struggling to produce capital in the first place. Some companies, like Chembio Diagnostics, were using their funds to help their businesses grow. The program intended to help small companies, non-profits, and those who are self-employed stay afloat by using the funds for payroll, benefits, and utility expenses.
The business owners that have received the PPP loan have found that some of the restrictions are too strict for what their company can do during this time. With 75% of the loan amount having to go to payroll, some owners do not have any work for their employees to do with the sudden slow down of business. The rest of the amount can only be used for rent, mortgage, interest, or utilities. The intention behind the restrictions may be in good faith, but some business owners do not feel it’s realistic.
Lastly, a worry for most business owners who have received this loan, or are thinking about applying is whether or not the loan will be forgiven or have to be paid back.
Businesses must understand how to allocate their SBA PPP funds and how to organize those funds to prove how they have used them. The SBA PPP funds must be spent during eight weeks after they have received the loan. All businesses must report their spending to the SBA. At TGG, we have created an SBA PPP Payroll Tracker to help you organize your funds and get your loan forgiven! There are still funds in the SBA PPP Program, if you need help getting all your paperwork together, try out SBA PPP Loan Toolkit!