Accounting

Pattern on PPP2 loan applications?

I noticed a pattern on PPP round 2 applications these past few days and wonder if others are experiencing the same. This morning I posted the observation on a NJCPA peer private discussion group and a Facebook public nonprofessional group seeking feedback.

I know of 9 small business clients that applied for PPP round 2 loans. All had a decline in revenue of more than 25% in 2020 vs the same quarter in 2019, apparent both in bank records and their accounting systems. These nine applicants  included for profit corporations and a nonprofit corporation, sole proprietorships, single member LLCs and one partnership. I prepared and submitted some of these loan applications myself on behalf of the clients. For others I acted only as adviser on the self-prepared loan application.

It is likely that some clients that did not have trouble with the PPP application did not even converse with me. But for this post I am only considering the PPP round 2 applications that I know about.

Successful applications: All of the businesses loan applications for firms that had actual payroll records (W2s and 941s) are moving ahead. None are approved yet, but I have not received any negative or discouraging feedback. The application process seems to be progressing normally.

Unsuccessful applications: All of the businesses that are sole proprietorships reporting income on a schedule C were quickly declined or stalled wit no apparent path forward. This included five LLC owners or sole proprietors that report net income on a Schedule C, using five different banks for their applications, all were approved for round 1 PPP, and now all of them are calling me frustrated that their PPP2 applications are declined or stalled.

This morning I went online to ask: “Has anyone with a schedule C sole proprietorship actually been approved for a second loan?” I will review the responses to look for any useful pattern of information and then update this post.