Case Study – Do not Count Yourself Out! PPP LOANS
Don't count yourself out.
When the Corona Virus hit, many small businesses and entrepreneurs suffered tremendously. As a result, the government passed a stimulus bill to provide forgivable loans to small businesses. Small businesses were classified as companies with less than 500 employees. Therefore, they could apply for the Paycheck Protection Program to help cover payroll for their employees. When the loan application was released, companies like Shake Shack and Harvard University applied and got loans. However, many minority-owned companies, entrepreneurs, and nontraditional businesses did not apply for the PPP loan. When I heard from business owners about why they didn't apply, some of the responses included:
They did not have the proper paperwork.
They felt that because they were a company of one employee – they didn't qualify.
They felt that their nontraditional company did not qualify
They thought they were restricted to one lender when applying.
They thought they had time to apply.
Although these seem like valid reasons to avoid applying, they highlighted problems confronting people of color when opportunities like this appear. People of Color count themselves out without even trying. I'm here to tell you that you should never succumb to those reasons for any loan or financial opportunity.
I admit that I had never used any accounting software during the start of my business. It meant I did not have the fancy financial statements larger companies had. However, I had records and could compile enough information to be evaluated by lenders. You may not have the exact paperwork they ask for, but you may have the required information. Call the lenders to identify alternatives to show proof of varied requests. For my solo entrepreneurs, bank statements, 1099's, and tax statements can always answer many of those financial questions.
When the PPP Loan program was released, solopreneurs thought they wouldn't qualify. The fact is that many did. The key was assembling the correct paperwork and establishing business proof via a business license and a federal EIN. The key to applying wasn't about size but purpose and use.
The PPP loan was also unprecedented because it supported nonprofit companies, including churches and advocacy organizations. As a result, many of these organizations felt they would be singled out when they were included.
If you have ever bought a car, or house, or even gone shopping for shoes, you never went with the first store you found. If you did, you still checked another option, just in case. When applying for a loan, you have the right to consider more than one lender. Each lender processed differently and at different speeds. Therefore, it was encouraged to apply to more than one lender. So in the future, if you are applying for a loan that several lenders administer, consider applying to more than one to ensure you get seen.
With any opportunity, especially funding, you must act swiftly. When the PPP loan was released, millions of companies applied, and then it ran out of money. If you applied in later rounds and were qualified, you automatically lost funding because of time, not eligibility. The key is always to keep essential paperwork, such as your business licenses, tax filings, and income statements, in one place so that when loans or applications become available- you have your reference papers available and ready.
As with most loans, people of color are disproportionately ignored. Between institutional biases or sometimes unrealistic expectations of what counts as qualifiers, we don't often get the chance to reap the benefits of opportunities. However, we can't be the ones to count ourselves out because when we do, we become part of the problem rather than the solution.