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PPP Doesn’t Help the Right People, Small-Business Owners Say

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What You Need to Know

  • More than half of respondents to a LendingTree survey said PPP loans helped big businesses to the detriment of smaller ones.
  • Many small-business owners reported trouble with the PPP loan application process.
  • The Biden administration has announced changes to make the program more equitable.

More than half of small-business owners in the U.S. do not think that Paycheck Protection Program funds have gone to the hardest-hit businesses, according to a survey by LendingTree.

PPP provides loans to help businesses keep their workforce employed during the pandemic, but the program’s rollout has been widely criticized. Initial funds provided by the CARES Act ran out within two weeks, and a second round of funding expired in August.

In that first round, many multimillion-dollar corporations took advantage of the program, while many small-business owners were unable to get aid.

The Consolidated Appropriations Act, 2021, signed into law Dec. 27, includes new funding for the PPP. However, many small-business owners who applied for loans this year said they had issues with the process, according to LendingTree.

On Feb. 22, the Biden administration announced that businesses with fewer than 20 employees would get exclusive access to PPP funds between Feb. 24 and March 9. It also laid out other changes in the program to make access to PPP loans more equitable.

LendingTree’s survey was completed before the administration’s announcement. The firm said many small-business owners who had participated would likely be cheered by the announced changes, based on their responses.

LendingTree conducted the online survey between Jan. 22 and Feb. 1 among 587 participants who had previously applied for funding through LendingTree’s small-business lending database.

Fifty-four percent of survey respondents said PPP funds helped bigger businesses at the expense of those struggling to survive. Twenty-nine percent were somewhat less critical, saying the funds were going to those who need the money — while also helping plenty of businesses that do not.

Messy PPP Application Process

Nearly 40% of surveyed small-business owners have applied for funding through the most recent PPP funding round. Fifty-three percent of those who had no plans to apply said their main reason was not meeting the eligibility criteria.

Of those who applied for funding in this latest round, only 9% were approved for 2021 PPP funding. Sixty-seven percent said they were still waiting to hear back.

LendingTree noted that small-business owners were generally modest in their requests for aid. The vast majority applied for less than $50,000 in PPP funding with their 2021 application, and not a single respondent asked for $500,000 or more.

Two in three small-business owners who applied for PPP funding in 2021 reported issues doing so. Twenty percent cited confusion about funding being denied, 19% difficulty finding the necessary paperwork and 16% trouble finding a financial institution to help with the application.

One in five PPP applicants said they had extreme difficulty applying for funds.

Seventy-four percent of survey participants reported that they had taken on debt, most commonly credit card debt, during the pandemic — the same percentage who said this in a September 2020 LendingTree survey. 

Small-business owners who have taken on debt owe an average of $40,733.

PPP Funding in 2020

Thirty percent of surveyed small-business owners said they applied and were approved for PPP funding in 2020, while another 21% applied but were denied. 

For those who applied for PPP funding in both 2020 and 2021, 72% said they worked with the same financial institution both times.

Of those who applied for PPP funding in 2020, 38% have applied for forgiveness. Of that group, 82% have received full forgiveness. Fifteen percent received partial forgiveness, while just 3% said their application for forgiveness was denied.

An additional 60% have not applied for their 2020 PPP loan to be forgiven but said they planned to do so.