PPP aftermath (well, probably mid-math) and other reflections:
-~2MM loans approved, with average loan size just above 200K
-4,700 financials participated
-6 States accounted for ~20%
-CA had $21B (about ~TX), but had only 24% of elig payroll covered vs. 44% for TX
Start/
-~2MM loans approved, with average loan size just above 200K
-4,700 financials participated
-6 States accounted for ~20%
-CA had $21B (about ~TX), but had only 24% of elig payroll covered vs. 44% for TX
Start/
1/The actual concept of PPP is simple: Allow small biz to retain employees that are critical to continuing ops when things open up (i.e. restaurants, nail salons, etc.) while providing a bit extra for things like rent, utilities, etc.
2/Execution of this program will be shown to be bad as the SBA/treasury did a poor job in the week leading up launch on 4/3 of giving participants a clear idea on timing, guidelines,approval basics,etc. This led to the vast majority of non-trad SBA lenders going into crisis mode.
3/In other words, banks around the US were forced to stand up operations to which they had zero expertise in, had not staffing, processes, or technology to try & process 2MM loans in 13 days. Couple in the lack of really clear info and late and you get a big mess.
4/Some banks have done better than others with their clients in terms of % of apps processed. No one is perfect, but many had staff members that worked 13 days straight, 16-18 hour days. I know this for a fact.
5/One of the things that slowed this down is the “build your parachute on the way down” problem as w/o clear guidelines, applicants often filled out things incorrectly and a lot of back and forth to get info. Each app often takes 1-2hours of work or more across a few ppl.
6/For startups, it was even more confusing with the affiliation issues. Thanks to for all the work on getting the level of clarity we ultimately got; unfortunately we didn’t really have this until 4/6 week after 1MM+ had applied (not that any bank ran a perfect queue).
7/I’ve seen VCs act 1 of 2 ways with their companies: A) If you have plenty of cash (i.e. 6+ months, don’t take it and save for those that truly need and B) “If it’s available and you’re eligible, why not. We have a fiduciary duty to capitalize company with available funds.”
8/So, fiduciary responsibility should be to the long term viability of the company, not an individual or group of employees.
8 (cont): Fidiciuary responsibility in startup world often means cutting staff to achieve longer runway than PPP (which in practice provided most with 4-6 weeks). It sucks and Carta's CEO did a great job in speaking about this,but it’s the nature of the game unfortunately.
9/A LOT of very needy biz were left out in the cold, and unemployment rate will push to 20%+ immediately if another tranche isn’t approved now. The EIN’s are public and there will be pitchforks for those that are perceived to have not needed it. Perception or not, this is reality
10/ Why did I say 7-9? Because if there is a 2nd tranche of $250MM (I believe it’s inevitable),think LONG and HARD before applying. I know many that have withdrawn because of these concerns. Is risk/return worth it? Only you can answer.
11/Stay safe, and let’s hope for more $ and a smooth outcome for all.
* Also on 6/, I meant to say thanks to @nvca for all their work in clarifying rules. Also big thanks to @EdGrapeNutZimm @trevorloy for their tireless work. I feel like we have known each other for years!
* Also on 6/, I meant to say thanks to @nvca for all their work in clarifying rules. Also big thanks to @EdGrapeNutZimm @trevorloy for their tireless work. I feel like we have known each other for years!
