Small businesses and startup leaders discuss their experiences with the PPP and EIDL application process and the role of technology.
Technology can be both a blessing and a curse, and for small businesses and startups that applied for federal grants and loans during the pandemic, the process was sometimes both.
Retrolux, a software platform for contractors and energy service companies, applied for both Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) loans.
"We applied the day Idaho was added to the emergency disaster list," recalled Leif Elgethun, CEO, through the Small Business Administration website. Then, "we got an email saying we needed to reapply due to program changes. We applied again through the SBA website."
That time Retrolux had the option to ask for the $10,000 EIDL grant, and the site indicated funds would be distributed in three days, Elgethun said. "This was over two months ago."
On April 13, the company received an email from the SBA saying that the rules were changing again, and each employee could receive $1,000 up to a maximum of $10,000 for the EIDL grant, he said.
Retrolux then found itself playing a game of email endurance. "We received a notice saying we were preapproved for the loan two weeks ago and were directed to an SBA website. We filled out the forms and then had to provide some additional materials."
Recently, the company was approved—after filling out and signing more documents online. Then the funds were deposited in its bank account, Elgethun said. "We also got the EIDL loan advance around the same time."
But that wasn't as challenging as applying for the PPP, he said.
"The rules were changing daily up until after the first week [once] they funded the program,'' Elgethun said. "We ended up applying for the PPP through multiple lenders and in some cases, multiple times as they adjusted their rules and forms."
That was necessary because each lender had its own requirements, he said. "They all have been very opaque into what the overall process is and where our application was at any given time."
Retrolux submitted applications with three lenders and started applications with two more. Most of the lenders had online portals for submitting the applications, but one required everything via email, he said.
"We ultimately were funded by one of the lenders out of the first pool of funds and the funds were deposited within 10 days of signing the paperwork."
Elgethun said he learned the importance of submitting applications as soon as possible and if working through private banks, to submit them to several banks to increase the odds of getting through the process.
"I found that working with banks that invested in technology generally was easier and ultimately resulted in approvals," Elgethun said.
Josh Simons, co-founder and CEO of Vampr, a social network for musicians, applied for a PPP loan and went through "various struggles at each stage of the sloppy rollout," he said. "We have been successful in receiving the funds but it's unclear still how they will accept which part of the loan to forgive."
Simons said he purposely waited until early April to apply because he wanted to go through his bank, Bank of America. The bank required Simons to fill out a questionnaire while it developed a portal to move applications to the Small Business Administration, he said.
"What that means for the consumer is you have to fill out the same information four or five times,'' he said, because amendments were made to the legislation created to grant the loans.
Once he filled out the "very simple, straightforward questionnaire,'' Simons said he was put on a waiting list while the bank waited for clear instructions on how to proceed and built the portal. "We had to answer the same questions again on the new site and then wait for documentation and then sign that…so you can see how the process was delayed multiple times."
He received the bank's application for the SBA loan at the end of April. That felt like applying for the loan a second time, he said, and added that he wished Bank of America would have been clear that the start of the process was just a questionnaire.
"I would say tech was abused…Why do a questionnaire that was essentially useless?" Filling out the application took about three hours, and that was on top of the hours Simons said he spent researching the legislation.
Although Vampr uploaded supporting evidence required in the application to the portal, "the bank got confused and sent us an email and said the application was at risk of being thrown out" if they didn't upload documents within 24 hours, Simons said. That required a phone call to get the matter straightened out.
"That's what happens with new technology—we also set up portals to manage things" at Vampr, and he felt the person who sent the email didn't know where to look. "It's a breakdown in the process," Simons said.
The average SBA/PPP payout to startups was $261,000, according to new data from Kruze Consulting, a startup accounting and CFO consulting firm, "which will buy most of them about two months," said Scott Orn, chief operating officer. About 40% of Kruze's startup clients applied for SBA/PPP loans, he said.
"On the application side, the only real tech that was useful [was] the reports from the payroll providers and the automated Google sheet calculators that accountants like Kruze were building," Orn said.
Like Simons, Orn said that while the banks had applications on their websites, "many were slow and confusing. It was better than paper of course, but not up to the normal banking standards."
He credits the bank employees who manually reviewed all the applications. "We heard stories where bank employees essentially had two jobs for weeks—their normal job, and then reviewing PPP applications. We all owe gratitude to the bank team members that powered through and got the financial aid to small businesses that needed it."
When it comes to loan forgiveness, Orn said he is expecting technology to be "hugely helpful. There is no way the banks can manually review the millions of forgiveness applications."
While the application portion of the process was thrust upon the banks with no warning in the middle of the health and financial crisis, he added, now they have had time to plan, and can "invest and build technology that truly works."
Shadrach White had a completely different experience. White, CEO of government cloud provider Airlift, said he was one of the first business owners to apply for an EIDL in Washington state. Writing about the experience on LinkedIn, White said he found the process to be "very smooth."
The SBA Disaster Loan Assistance site has been updated to remove the online application portal and replaced with downloadable PDF forms that are easy to upload on Box, according to White.
"The only challenge has been systematic due to high traffic to the public portal and downstream systems," he wrote.
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