Sunrise Banks recently reached a milestone: Since the Paycheck Protection Program (PPP) started, we’ve processed more than 1,000 loans through the federal stimulus program for over $200 million.
That’s great news for every PPP loan recipient, big or small. But it’s especially helpful for extremely small businesses that work with a skeleton crew and lack the resources of larger organizations.
The average size of a Sunrise PPP loan during the second round of funding was around $70,000, and 80% of the PPP loans processed in round two have been under $100,000.
“These are the one-, two-, three-person shops in a lot of cases,” said Sunrise Banks CEO David Reiling. “That’s really cool to see. It may not mean as much for us in fees, but it means a lot for these small businesses.”
At Mission360, a consulting firm based in the Twin Cities, new projects are being delayed because of COVID-19. And the firm’s owner and sole employee, Patrice Tetta, is trying to make ends meet until projects get back on track.
Mission360 provides strategic planning, resource development and evaluation services to nonprofits, school districts and government organizations. The firm’s clients include early learning centers, school districts, institutions of higher education, and multiple community-based nonprofit organizations.
Because their bottom lines have taken a hit, “organizations are postponing projects or downsizing large projects; they’re reducing the number of hours they contract services for; or they’re delaying payment on current invoices,” said Tetta. “Money is coming at a significantly reduced rate.”
Tetta received a PPP loan to cover her payroll. She’s extremely grateful for the bridge funding and says for the time being the funds will “fill the gap” until projects ramp back up.
Nearly 2,000 miles away in Oakland, California, Dan Leibsohn is facing his own set of economic challenges during the coronavirus.
Leibsohn is the founder and executive director of Community Development Finance, a nonprofit that provides access to capital and financial literacy to low-income clients. Community Development Finance offers low-cost check-cashing and loan services to those who are underbanked or unbanked and who are low-income with bad credit.
The organization saves clients anywhere from $175,000 to $225,000 a year, said Leibsohn.
How has COVID-19 affected the nonprofit?
“Pretty dramatically so far,” said Leibsohn. “There’s immense pain in our neighborhoods out here. People don’t have jobs so they’re not cashing checks. At least a third of our borrowers have asked for deferred loan payments. Our revenues are down substantially.”
Community Development Finance is based in Oakland and provides financial services to low-income individuals
Hope came recently in the form of a $30,900 PPP loan. The money will allow Community Development Finance to keep providing services for now and came just days before the organization’s 11th anniversary.
“These funds were absolutely critical to the continuation of what we’re doing,” said Leibsohn.
Both Community Development Finance and Mission360 are examples of PPP loan recipients that would have likely struggled to stay afloat without assistance. And these small shops are an integral piece of broader economy, said Tetta.
“If small businesses go out of business, it creates a ripple effect,” she said. “I am now not hiring people to do projects around the house; I’m not bringing my car to be serviced; we’re buying less stuff.”
“Sunrise treated us objectively and compassionately. I have really not run into many other organizations that have received funding – it’s pretty rare,” said Leibsohn. “So I’m really grateful to the bank for their support.”
For more information on PPP, as well as other financial relief options during COVID-19, visit the Small Business Administration’s website.