PPP Is No Panacea, But Is Crucial To SMB Outlook

From the ongoing saga that is the Payroll Protection Program (PPP), we’ve quickly learned that $349 billion is just a down payment on a revivified U.S. business sector. And, with Congress recently clearing another $310 billion in PPP funds – $60 billion being earmarked for smaller lenders – many SMBs believe that aid money is now a make-or-break proposition for them.

PYMNTS has been polling SMBs during the pandemic, charting the downward course of commerce since death figures and citywide lockdowns became part of everyday life in America and around the world. Meanwhile, bailouts have been greeted with a mix of hope and doubt. SMB behavior regarding loan applications reflects ongoing confusion – and some clarity.

According to our latest analysis, “On April 6, in our previous survey, we found that only 32.7 percent of SMBs had applied for SBA loans — including, but not limited to, PPP loans. But this time around, in the latest April survey, as many as 41 percent of SMBs said they had applied for the PPP loans by April 20.”

SMBs that have received PPP loans report being more optimistic than before government aid began flowing. “Getting the loans provides at least some measure of confidence,” according to the latest analysis, which found that “43.2 percent of SMBs that had already received the PPP loans said they were ‘sure’ they would be able to survive.”

As to which lenders SMBs turned to for PPP assistance, marquis national banks take the cake as the No. 1 source, followed by community banks and credit unions (CUs). “Another 27 percent applied through regional banks,” according to the latest analysis. “Of those firms that had not applied for the loans, nearly 39 percent of those eyeing PPP aid said they would do so through national banks. Less than 2 percent of those firms that had yet to apply said they would do so through digital-only banks. This indicates that the digital upstarts who’d been looking to unseat incumbents have a ways to go before they garner significant share against traditional financial institutions (FIs) in times of crisis.”

The majority of SMB owners (44.6 percent) will use their PPP loans to keep their personnel employed and prep for reopening. What’s more telling is how owners expect business to change when reopening day finally arrives. Over a quarter of respondents say they will keep some of the changes made during the COVID-19 peak. Nearly 39 percent think changes will be assimilated, but that business as usual will return in some recognizable form.

“We’re transitioning from an offline to online world,” the analysis states. “Only 62 percent of firms plan to keep their physical locations and use them ‘exactly’ as they did before the pandemic. About 11 percent will reduce the physical spaces they rent. And 43 percent will rely more heavily on their online operations to generate sales than they did before.”

“After all, as detailed in a separate study, The Post Pandemic Reset, millions of consumers will continue to work and shop and order online even after the pandemic ends,” the analysis continues. “That seismic shift is in the wings, even as SMBs seek the cash lifelines to keep things humming until then.”