At first, Dr. David Popper swung and missed.
As soon as the Paycheck Protection Program began accepting applications, the longtime Broward County optometrist attempted to apply for a loan from one of the nation’s largest lenders in order to keep his practice – and its 15 employees – in cash.
After weeks without a response, he turned to a Fort Lauderdale branch of the Pacific National Bank in Brickell. Right away, he was put in touch with a personal banker “who was always available” and, within days, had received his loan closing documents.
The lesson: Sole proprietors who own businesses and still need funds, should still apply – but at a local bank, although opening a new account may be required. PPP funds are always available, according to Politco.
“If I had been to a community bank the first time, I don’t think I would have had this [initially frustrating] experience, ”Popper said. “A lot of friends and colleagues got money in the first round through community banks.”
The Federal Bureau of Labor Statistics estimates that about 10 million Americans are classified as self-employed. This figure excludes the roughly 55 million “construction workers” – contract workers who fill out 1,099 tax forms – who are also eligible for PPP loans.
According to the BLS, the largest segment of self-employed workers are in personal care positions, like Popper. While no exact data is available on how many business owners like Popper pay themselves as employees, the South Florida tri-county area is likely to have over 100,000. A 2018 report from the International University of Florida shows that in Miami-Dade alone, there were almost 55,000 companies with less than 5 employees.
Linda Kaplan, a Miami-based immigration lawyer, had a similar experience.
Kaplan applied for a PPP loan shortly after the loans became available in April for the law firm she has owned since the late 1970s. She is still waiting to hear from Wells Fargo. She was able to continue to pay her single employee through an ongoing work slip.
A Wells Fargo representative emailed the following statement on Friday:
“Since the second round of funds became available for the Paycheck Protection Program, Wells Fargo has submitted over 100,000 claims to the ASB and we continue to process tens of thousands more to support our small business clients.
“In order to get the largest number of applications from our existing pipeline to the ASB as quickly as possible before the $ 310 billion in funding runs out, we will no longer be accepting new applications. We will submit completed applications until funds are no longer available and continue to provide additional assistance to our small business clients during these unprecedented times in the form of fee waivers, deferral of payment and other efforts. “
When Kaplan applied on behalf of a nonprofit group of which she is treasurer, the experience was quite different. First Horizon Bank, a Tennessee-based bank with a branch in Key Largo, responded immediately.
“For First Horizon, I received the loan documents the same day and the money was deposited the next day,” Kaplan said in an email.
For sole proprietorships, relief was initially slow. The process for sole proprietorships hasn’t even been defined before April 14, 11 days after the availability of the first round of PPP funds.
The situation has cleared up since Congress approved a second round of PPP funding on April 27. Data released by the Small Business Administration shows that until May 1, highest number – 1.6 million – of PPP loans awarded in the second round of the program were for amounts less than $ 50,000 – meaning that most went to self-employed. And the majority of these loans were processed by lenders with less than $ 50 billion in assets.
The big banks say they are not prejudiced against the independents. In an email, a Citibank spokesperson said it had approved more than 92% of all applications from individual companies. In the first phase of the PPP program, he said, 72% of loans went to microenterprises – those with less than 10 employees – while 57% went to companies with less than five employees.
Christopher A. Meccariello, chief operating officer of Innovative Financing Solutions, a consulting firm that works with lenders on government spending programs, said one problem could be the documentation required.
“We haven’t seen any different treatment for the sole [proprietors] and the self-employed, ”he said in an email. “The problem we found is that many applications from this group were incomplete, resulting in a request for additional information or clarification, slowing down the process.
Shane Canfield is a Hollywood-based professional chauffeur who drives primarily for limo companies and fulfills Uber or Lyft gigs. He described applying for a PPP loan as an independent contractor “a full time job”.
Because he keeps accurate bank and tax records, he was able to apply for both the PPP program as well as the SBA’s Economic Disaster Lending Program – although he was not approved.
While he waits for the funds, he makes do with unemployment benefits and the federal stimulus check of $ 1,200.
“I am up to date on [my bills] for now, ”he says. But among the other pilots he said: “I’m like one in 10.”
This story has been updated with a statement from Wells Fargo.