architectural firm owners share their PPP woes | Characteristics
The Marriner S. Eccles Federal Reserve Board Building
“Tiring”, “Poorly managed and uncommunicative”, “Disappointing, but not surprising”, “Time consuming, anxiety riddled, frustrating”, “Horrible”.
These are some of the words that executives of architectural firms have used to describe their experiences, via Archinect COVID-19 Economic Relief Investigation, while trying to access small business assistance programs developed by the federal government in response to the COVID-19[female[feminine crisis. The failed deployment of the emergency economic aid package and its Payment Protection Program and Small Business Administration-backed loan initiatives have accelerated an already rapid financial crisis among small businesses across the country, including within the architectural community, where many businesses operate with low margins, even in good economic times.
Added to these challenges was the sense of false hope apparently created by government aid programs, which include $ 350 billion in extended forgivable loans to cover payroll and overhead, some tax cuts for maintain current employees at salary and other emergency loan initiatives aimed at small and medium-sized businesses. As Archinect reported last week, the $ 350 billion in funding available for the PPP was quickly exhausted when the program was launched, even before a significant number of companies across the country were not even able to apply. Recent news reports have indicated that the underfunded program has dried up, in part due to large businesses, including fast food franchises and other large corporations, gobbling up meager relief funds for small businesses. American.
Respondents to Archinect’s COVID-19 economic relief survey echoed these anecdotal accounts.
I think a lot of small businesses won’t survive this. It really showed how close to the bone a lot of companies are and how little cash reserves we usually have.
78.5% of businesses did not receive any funding from the Paycheck Protection Program. Source: Archinect COVID-19 Economic Relief Survey.
For example, while over 90% of respondents indicated that they have requested P3 funding, over 40% have not even received a response yet. Of those who have heard from them, only 14% have had their loans funded. 78% did not receive funding, a troubling statistic given that 100% of companies that responded to the survey have fewer than 25 employees, the majority, 57%, with five or fewer workers. At these staffing levels, the difference between
Of those who applied for an Economic Disaster Loan (EIDL), only 39% received a response from the SBA regarding their loan request. Of those who heard from them, just 8% received loan documents or funding.
As companies deplete cash reserves or lay off workers as the crisis continues, the implications of slow and inadequate financing are dire. One respondent tells us: “If we can’t get into the 2nd phase of this, we will have to cut 75% of the staff (most of our projects are shut down) and finish existing projects. Unless there is a turnaround in a month’s time and the economy picks up, we will likely go out of business by the end of 2020. Our company is 39 years old.
Maintain an active relationship with the people at your bank! one architect writes, “Good times and bad, having this relationship makes it into the top 5 of all ‘starting your own business’ lists for a reason.
Another wrote: “I think a lot of small businesses won’t survive this. It really showed how close to the bone many companies are and how little cash reserves we usually have. “
One respondent explains that the experience has tarnished their expectations about the effectiveness of any response to the crisis: “The fact that relief funds are not available has hurt my optimism and my belief that the government has a plan. organized to help small business owners. Where did the funds go? I suspect large companies with more than 100 employees. I focus on marketing.
The fact that relief funds were not available damaged my optimism and my belief that the government has an organized plan to help small business owners.
For others, the delay in the federal response was compounded by the program’s reliance on private banking institutions for loan processing and distribution. An architect explains, “Our bank needlessly delayed the application process while it devised a ridiculously complicated process that extended the trail so far that funding is now exhausted. An incredibly difficult, frustrating and ultimately fruitless exercise. All the more painful as many other businesses around us with smaller banks have had their PPP applications approved. “
This comment echoes other advice offered by successful applicants. “Maintain an active relationship with the people at your bank! One architect writes, “Good times and bad, having this relationship makes it into the top 5 of every ‘start your own business’ list for a reason.”
Another posted a similar comment, writing: “I will probably switch to a smaller local bank in the future once this crisis is over. Most peers who do business with smaller institutions have received approval and funding. “
The possibility of response bias is of course present in our survey, but even so, of the 28 people who responded to the survey, only one company left an overly positive comment about the state of economic aid: these programs, ”writes this architect,“ details have been slow to come out, but the movement and dispersion of funds has been rapid. “
The rest? “Disappointed” at best.
Editor’s Note: We will be keeping this survey until the end of the week for further responses and will provide further editorial updates if there is enough additional feedback to report the updated results.
We will also publish follow-up surveys if the government funds another round of loans or if new support programs are introduced.