A survey by Paychex reveals 64% of companies applying for a Paycheck Protection Program (PPP) loan found success.
The data for the survey comes from owners the SBA classifies as small businesses.
By mid-June, a third (34%) of respondents applied for a PPP loan and of those who had applied 64% received payment. And another 15% of them had their applications approved and are awaiting payment. Only 10% of them submitted their paperwork and are waiting for approval.
PPP Loan Application Success Rate
Among the business owners surveyed a resounding number of them (90%) say the Paycheck Protection Program Flexibility Act’s provision extending the forgiveness period from eight to 24 weeks would be impactful to their business. A further 82% say the same about the loan repayment term being extended from two to five years. They say it will also have a positive impact.
Additional perceived benefits of the Flexibility Act include payroll taxes being differed (80%) and forgiveness being allowed even if the full workforce doesn’t return (78%).
More than half (60%) say the PPP will help them retain or rehire all of their employees. While another 28% say it will help them retain or rehire at least half of their pre-lockdown workforce.
“The PPP Flexibility Act has eliminated some of the barriers to businesses getting the most out of their PPP loans during the reopening phase and beyond,” said Martin Mucci, Paychex president and CEO.
PPP Giving Businesses a Leg Up
As of mid-June, almost half (49%) of those in the survey say they are fully open and operational. Almost the same amount (42%) say they are open on a limited basis. A fraction (9%) say they are currently not open, but do have plans to reopen.
Among those businesses that are closed, 12% plan to open this month. A further 27% plan to reopen in July while the same amount (27%) plan to reopen after July. However, there are still 19% of these businesses waiting on conditions to improve before they reopen.
Already 30% of businesses have said they are already profitable. Despite the optimism, businesses expect to experience reopening challenges. Almost a quarter (26%) are concerned too few customers might be returning to them when they open. Others anticipate customers might not be comfortable coming to their place of business (20%). And others are grappling over how to get the word out when they actually open (18%).
On communicating with customers when they are open. 28% say they are using the opportunity to put to rest concerns by addressing their safety and social distancing practice. While 22% are being transparent about their cleaning practices. The top three means of communications businesses are using to engage with customers on these issues are through email, word of mouth and phone calls.
Surprisingly, 35% of business owners have not used any promotions to notify customers that they have reopened. A further 35% said they aren’t advertising any differently than they were before the pandemic.
What are Businesses Doing Differently
According to the survey, 24% of businesses are allowing employees to work from home permanently during the post-lockdown period. From an industry perspective, professional services businesses are far more likely (36%) to institute permanent work from home policies than their peers in other industries.
Businesses are also planning on permanently increasing their use of technology to increase employee productivity (23%). A small portion (18%) have said they plan to offer flexible employee scheduling moving forward.
The crisis has also strengthened community spirit with businesses recognizing they are in this together. Some 70% of those in the survey say they are making an effort to support other local businesses during this time.
The Flexibility Act enacted on June 5, 2020, made key changes in the program that makes it easier for small businesses and self-employed individuals to comply with the Program requirements and obtain forgiveness of the loan. Additional changes include more PPO lenders being made available as well as an extension on the period to spend the loan.
With an average loan size of $113,228 and 5,458 lenders participating in the program so far more than 4.6 million loans nationwide have been approved. Remember loans are eligible to be fully forgiven if businesses spend 60% of it on payroll; paying interest for mortgage, rent and utilities. The program officially runs out on June 30, 2020.
More in: PPP Loans, Small Business Statistics
I’m glad they’re working out the kinks and businesses are having more success with PPP loans now.