Hello everyone,
This media outlet took a little heat in reporting that Delaware temporarily ranked last in the nation in the volume of the Payroll Protection Act.
Simply stated, PPP is a loan/grant. In return for keeping some or all employees on the payroll, all or a portion of the loan is forgiven. It is no wonder that bankers were flooded with applications.
It turned out that the final figures showed that the state’s lenders were able to successfully process loans with a total value near $1.1 billion. A couple of other states actually came up with lower loan totals, keeping Delaware out of the basement.
M&T, one lender that released its stats, processed more than $300 million of loans. According to M&T’s estimates, the PPP injection will aid 31,000 employees in the state.
Lenders did their best to process the mind-boggling volume of loan applications. Faced with the avalanche, many banks largely confined their work to current customers with a business checking accounts or loans. One exception was locally based Applied Bank.
By one account, money ran out almost immediately.
A Facebook post or two seemed to indicate a mixed performance at best, with many getting “no’s” or have applications awaiting more money
Hanging over the program is the undeniable advantage that bigger companies enjoy, With their bankers, accountants, lawyers etc. leading the way, at least a few companies were able to elbow their way to the front of the line.
SBA officials insist that most loans went to smaller companies with smaller banks doing much of the lending. The numbers seem to back up the claim, but more information is likely to leak out on some companies getting first dibs.
The most prominent companies mentioned were entities of the Ruth’s Chris steakhouse chain, the Potbelly sandwich shop group and a Tex-Mex restaurant chain. All had access to other capital and other options to keep their workforce intact. Shake Shack, which has a location near Christiana Mall, gave its $10 million back, citing multiple reasons.
While their total piece of the pie may have been small, the aggressiveness of the big guys froze out others.
It now appears likely that another $300 billion is likely to be appropriated but may not be enough and the question is whether it will simply be a repeat of the first round.
Here’s my idea. Make bigger companies operate under a stricter rule. It will keep their financial teams busy but might introduce an element of fairness
Stay well and stay safe. This newsletter returns tomorrow. – Doug Rainey, chief content officer.
