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For PPP Lenders, a Mad Dash to Loan $660B


What it's like to lend $660 billion in Paycheck Protection Program loans in just six weeks and counting, as told by the lenders and intermediaries trying to rush funds to businesses hurt by the pandemic.

“We had our whole company, 44 people, working 18-hour days for 47 straight days,” said Ron Feldman about the race to get ApplePie Capital’s customers connected to Paycheck Protection Program funds. 

Three other lenders or intermediaries, including Pinnacle Commercial Capital, Boefly and Live Oak Bank, tell similar tales.

By this week, “it’s slowed to not quite a crawl,” said Feldman, CDO of ApplePie. “We’re still open, taking applications,” but it wasn’t clear how much of the second tranche of funds approved by Congress, $310 billion on top of $350 billion the first round, was still available.

“There’s no transparency coming from the SBA. I heard there was $75 billion left over the weekend. Every day is Groundhog Day,” said Feldman. (By midweek, the Treasury Department said $100 billion is still on hand.)

ApplePie Capital is an intermediary in the process. “We aggregated applications and processed them through our banks and got quite a few loans placed, but it was a very painful process for everybody,” he said. “The SBA changed the rules, they’re still changing the rules.”

For example, “they issued guidance on seasonal employees on April 28.”

The PPP is part of the CARES Act, signed into law March 27 and aimed at supporting small businesses through the pandemic. It offers loans administered through the Small Business Administration that are forgivable if 75 percent of the funds go toward paying employees, while 25 percent is allowed to go toward rent, interest and utilities.

But the forgiveness piece “is something I would put a ‘to be determined’ on,” Feldman said. “The whole forgiveness thing is still up in the air. They’re talking about legislative changes to make it more lenient. Nobody quite understands,” he said. 

“With all that said, odds are they’re going to change it, and they’ll probably change it two more times. If the country doesn’t open, there might be round three,” Feldman, pictured at right, said, although he does not advise that businesses “get in line” for more funds when round two is closed.

“No, because we don’t know what the rules will be for another round. There would be no reason to get in the queue.”

Seven days a week

“In the first phase of the PPP, out of something close to 100 accounts that we had, only five did not fund in the first round, which is an amazing statistic," said Bill Wildman of Pinnacle Commercial Capital. “We’re going to do something in total around north of $60 million.”

Getting all those loans processed for customers, primarily via a bank in Florida that Pinnacle identified as a partner in March when the PPP was proposed, was tough.

“The bank worked seven days a week; we worked seven days a week. We had calls every day; they gave us a client services team,” he said. “Then the second round, it slowed up a lot for us,” with about 25 new accounts submitted.

Wildman said his decision during the first round of funds, to serve primarily current Pinnacle customers vs. opening up to other franchise brands, was the right one albeit unpopular at first. 

“I had some of my team members that weren’t particularly happy with me,” he said. “Obviously these banks had never done this before; we had never done this before. I didn’t know how it would go. I wasn’t wanting to risk Pinnacle’s reputation if we couldn’t keep up.

“So I didn’t let that happen, thank goodness, because there’s a lot of horror stories out there that did.”

As of May 6, the Treasury Department said more than $100 billion was still available to lend, of the $660 billion total funds in both phases; the second round became available April 27. Through May 1, less than 1 percent of the loans were for more than $1 million and the average size loan amount was $79,000.

Wildman said activity has slowed dramatically this week, but it’s hard to say whether that’s because demand has been satisfied or other reasons. “I think all of these banks are really fatigued with the program, and they’re tired,” he said, citing some banks that have taken down their online portals.

Other banks, particularly smaller, community banks, he said, are still actively processing loans. “If you’ve got a local bank willing to take applications, you absolutely should do it, in my view,” he said. “If you can take that money and use it for the appropriate things,” mostly payroll, “then you should take the money.”

The next big challenge will be helping clients verify they’ve spent the right amounts of money on the right things when the first “look-back” period begins, eight weeks from when borrowers received funds. Wildman noted there are moves in make those rules more lenient to help business owners whose stores are closed.

‘A special ball of wax’

Mike Rozman, CEO of Boefly, noted on a Franchise Times-sponsored webinar the backlash when large, publicly held companies including Shake Shack and Ruth’s Chris received PPP funds in the first round, especially companies that had done share buybacks in the past. Although both companies followed the rules at the time, they returned the funds amid public shaming and a Treasury Secretary scolding that PPP was meant for small businesses.

Rozman, pictured at right, noted all PPP borrowers should be aware of intense scrutiny around the program, with more to come as lenders will need to satisfy regulators that they and their borrowers are following all the rules. “You as business owners that are borrowing, this is a special ball of wax and you have to do everything you can” to satisfy regulators. “Assume every email you wrote…could end up in your bank’s audit,” he said.

“Each bank has a high number of regulators. Everyone on this call should walk away with: No one knows what all banks will do, but make sure your bank is worried they’ll end up on the front page of the Wall Street Journal because I did something wrong,” he said. “The bank cares about one thing: making sure that SBA guarantee is protected.”

Too busy to talk

The last word goes to Live Oak Bank, the fourth lender contacted to comment for this article, where a banker perhaps spoke for many when asking to schedule an interview later on. “This week may not be good given how busy we are with PPP and serving existing customers,” he said.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at




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