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We translated the 3 most confusing PPP guidelines for entrepreneurs who might not know they qualify for the $130 billion the government still owes businesses

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There is just one week left to submit a PPP application.
AP Photo/David J. Phillip

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  • An estimated $130 billion in Paycheck Protection Program funds remain unused, even as companies across the country struggle to stay in business.
  • A survey from the small business referral agency Alignable found three key reasons that entrepreneurs were passing on the PPP.
  • The reasons — higher rejection rates of minority-owned businesses, confusion about the eligibility of independent contractors, and a lack of awareness about the recently ized PPP Flexibility Act — account for about $117 of the unused money.
  • There is just one week left before the window to submit a PPP application is closed, and you can still apply if your business has been negatively affected by the pandemic.
  • Visit Business Insider's 真人百家家乐网站homepage for more stories.

US Small Business Administration data shows that loan activity in the government's $670 billion Paycheck Protection Program has fallen off considerably after an estimated $128 billion remains unused, even as small businesses across the country struggle to remain open — or Alignable polled more than 7,300 business owners from its network of more than 5 million members across North America.

The survey found three key reasons that entrepreneurs were passing on the PPP: higher rejection rates of minority-owned businesses, confusion about the eligibility of independent contractors, and a lack of awareness about the recently ized PPP Flexibility Act.

Alignable estimates these reasons taken together account for $117 billion in funds that might have otherwise been allocated.

"If all of these unallocated funds actually went to the businesses that qualify for them, the U.S. small business economy would likely recover much more quickly," the report said.

$17 billion should go to minority-owned businesses, which are rejected at nearly twice the rate of nonminority-owned ones

Nearly half the minority business owners polled said they never applied for PPP loans — "I don't stand a chance," one business owner said.

Of those who did apply, just over half reported receiving funds, while nonminority business owners saw an approval rate of 79%.

Nearly one in seven small businesses in the US is minority-owned, and Alignable calculated that if they enjoyed equal approval rates, about $17 billion in additional loans would have been made.

$50 billion should go to freelancers and self-employed workers who don't know that they're eligible

Freelancers, solopreneurs, independent contractors, and gig workers constitute more than 80% of US small businesses, and nearly four in 10 of those people did not apply for a PPP loan because they thought the program wasn't for them.

"Not having employees other than myself, I didn't think I qualified," one respondent said.

In fact, independent workers have been eligible from the very beginning of the program, even though they had to wait a week to begin applying. Had these eligible entrepreneurs applied, Alignable estimated an additional $50 billion would have been used.

$50 billion should go to business owners who weren't aware of the new flexibility rules

Three-quarters of businesses polled said they hadn't heard anything about the new PPP Flexibility Act, which passed earlier this month with far less fanfare than the initial program.

The new law extends the time businesses have to use loan funds from eight weeks to 24 weeks and reduces the amount that businesses are required to spend on payroll costs from 75% to 60%.

It also extends the time businesses have to rehire workers, use the funds to pay them, and qualify for loan forgiveness from June 30 to December 31. And the law is more flexible for employers who cannot return to their full pre-pandemic payrolls, since many businesses are shut down or operating under capacity.

Of the business owners who had heard about the update, one in five said the new fixes gave them the confidence to apply for a loan. Alignable estimated that half of all small businesses had not applied for PPP loans and that if 21% of those changed their minds, another $50 billion would be lent out.

What you should do to cash in on the unclaimed $130 billion

There is only one week left before the window to submit a PPP application closes on June 30. Any business that has been negatively affected by the pandemic should apply.

If you're not sure, you can always prepare a paper application and discuss it with an accountant, financial planner, or other trusted business adviser.

The latest guidance from the Small Business Administration makes Lender Match directory to help connect borrowers with approved PPP lenders.

"Small businesses that received PPP loans are in much better shape right now than those who haven't yet, so give your business a fighting chance and apply now," Alignable cofounder and CEO Eric Groves said in the report.

PPP loans can't solve every problem for your business, but they could provide critical relief, as the road to economic recovery looks like it will be long and uneven.

SEE ALSO: THE COST OF REOPENING: Here's how much companies should expect to spend per employee when it's time to welcome everyone back

More: BI Prime Small Business Entrepreneurship re-open
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