The National Federation of Independent Businesses (NFIB) on Tuesday (June 2) released results from its latest survey, which showed how business owners are utilizing government programs to respond to the COVID-19 pandemic.
This survey was conducted with a random sample of NFIB’s membership database of about 300,000 small business owners. The survey was conducted by email on May 29-30, 2020. NFIB collected 619 usable responses.
“The majority of small businesses are still negatively impacted by the economic crisis,” said Holly Wade, NFIB Director of Research & Policy Analysis. “Adding flexibility to the PPP loan forgiveness is one thing our elected officials can do to ease the burden on small businesses nationwide.”
NFIB State Director Sylvester Smith said, “This vital source of funds has proven critical to keeping businesses open and Arkansans working.”
Findings from the study show that more than 3 out of 4 businesses applied for a Payroll Protection Plan (PPP) loan. The PPP loan allows for loan forgiveness if 75% of the money borrowed is utilized for payroll purposes within an 8-week window.
According to the survey, 77% of small business owners have applied for a PPP loan. Almost all who have applied, 93%, have received the loan. Almost one-quarter of borrowers who have received the loan have already used at least 75% of the proceeds with 4% having used the entire loan already. Just over one-third (34%) have used between 50-75% of the loan and another 25% have used between 25-49% of the loan to date. Thirteen percent (13%) have used less than a quarter of their loan and 5% have not started using the loan proceeds yet.
Another loan program constructed by Congress to respond to the COVID-19 pandemic is the Economic Injury Disaster Loan (EIDL) program, which is administered by the U.S. Small Business Administration. The EIDL program allows for long-term, low-interest loans for small businesses with a 12-month deferral for first payments.
Of the 35% percent of respondents who applied for an EIDL loan, 57% have been approved so far, 38% have not heard yet about the status of their application, and 5% were denied. About 36% of EIDL applicants have received the loan, up from 21% who had received the loan as of May 18th. Sixty-nine percent (69%) of those who requested the EIDL emergency advance have received those funds.
The Main Street Lending program is a new lending program created by the Federal Reserve targeted to larger small and medium size businesses. The loan program offers low interest loans (3% + 3-month Libor), 4-year loan that allows payment deferral for up to one year. The minimum loan amount for this program is $500,000.
Very few small business owners are familiar with the program, according to the NFIB survey. Only 12% report that they are somewhat familiar with the program. Just a few small business owners (less than 1%) were more familiar with it. The vast majority of small business owners, 88%, were not familiar with it at all.