SBA-Logo-Horizontal-RGB

Nonprofits and their advocates nationwide say the federal government badly botched the launch of the Paycheck Protection Program.

"The rollout has been a disaster," Kate Barr, CEO of Propel Nonprofits, told Nonprofit Quarterly. Propel, based in Minnesota provides financial and consulting services to the sector.

Part of the $2 trillion CARES Act, the PPP is intended to help small businesses and nonprofits through the economic dislocation of the coronavirus pandemic. (See our FAQ here.) Organizations can apply for assistance equal to 2.5 times their average monthly payroll.

While the intention was good, Barr and others say the program was rushed into place too quickly. Guidance changed practically hour by hour and much of it was unclear. The "first come, first served" policy ensured there would be a stampede of applications, and the U.S. Small Business Administration was overwhelmed.

Banks were, too: Facing outsized demand and with limited administrative capacity, they had to choose which customers to help. That was the PPP's "structural flaw," according to banking law professor Mehrsa Baradaran, cited by news website Inside Charity.

"Banks are incentivized to choose the customers that make them the most money," she said.

Along with nonprofit leaders, many business owners were similarly nonplussed with the PPP's implementation, even as large chains raked in millions of dollars in aid.

Congress' initial $349 billion appropriation ran out last week, and the SBA stopped accepting applications, pending additional funding. Federal officials say the SBA approved more than 1.6 million loans — the equivalent of 14 years worth of loans — in less than two weeks.

A supplementary aid package is reportedly being negotiated that would replenish the PPP with $300 billion in new funding.

According to Barr, community banks and regional banks did much better at helping small nonprofits than the national behemoths.

Talk back: OneUnitedLancaster is interested in hearing from organizations that applied for PPP loans, or tried to. If you can, please take a few moments to describe your experience in the comments to this post. 

Tim Stuhldreher

Leave a comment

Your email address will not be published. Required fields are marked *