Lindsay Cates Lindsay Cates
Senior Manager, Communications and Strategy, U.S. Chamber of Commerce


June 01, 2020


The moment Paycheck Protection Program (PPP) applications were open for the self-employed and sole proprietor small businesses, Krystal Douglas, owner of Music City Sewing in Nashville, had her paperwork ready. Before the COVID-19 crisis, Douglas was dressing Grammy-winners and rock stars, but with live music events cancelled for the foreseeable future, her entire sewing business of creating custom stage costumes and backdrops had come to a sudden halt.

Douglas initially had trouble securing a PPP loan. She turned to Kabbage, a financial technology company providing funding directly to small businesses, where Douglas says she found clear requirements, a streamlined process, and a helpful advocate on the other end of the phone.

“It wasn't just a situation where I lost several months of work. All of our business was cancelled for the rest of the year,” Douglas said. “Kabbage bought us time for us to pivot and rearrange the rest of our year, and it just means the world to me. It's changed everything.”

With funding secured, Music City Sewing altered their operations and have made more than 6,000 masks for the Nashville area and beyond. Douglas runs the company on her own, but typically has 12-14 subcontractors working for her. Her loan allowed her to keep many of them sewing through the disruption.

Funding is reaching the self-employed and small businesses

Coronavirus pandemic relief funds are effectively reaching small businesses, including the self-employed, and online lenders like Kabbage and Intuit QuickBooks are proving to be reliable partners for many. Plus, not only are funds reaching the self-employed and sole proprietor businesses, there has been a significant increase in requests for self-employed loans in recent weeks, said Tom Quaadman, executive vice president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce.

“Tens of millions of self-employed Americans run their own businesses, and their survival is critical for a successful recovery,” Quaadman said.

Kabbage was one of the first financial technology companies to accept PPP applications, and immediately saw huge interest from mom-and-pop shops and self-employed businesses, said Kathryn Petralia, co-founder and president of Kabbage.

By the end of May, Kabbage received Small Business Administration (SBA) approval for over 115,000 applications, totaling more than $3.6 billion in funding for small businesses. Of those, more than 40% of applications were self-employed businesses, and more than 80% had five or fewer employees. Kabbage’s average loan size for the PPP is $30,000 compared to SBA’s overall average of $115,000.

Similarly, QuickBooks by Intuit, which provides online accounting software for small businesses, immediately took action after realizing the broader Intuit portfolio of online financial programs, including TurboTax, put the company in a unique position to help small businesses easily apply for and manage their PPP loans.

“Customers that use us for payroll, or have filed taxes to TurboTax, are able to get through the application process on average under five minutes,” says Lucas Voiles, vice president and general manager of QuickBooks Capital at Intuit.

About six million small businesses use QuickBooks for their accounting, and 1.4 million of those businesses use QuickBooks for their payroll. The businesses using the payroll program are “the smallest of the small,” said Voiles, with 80% of them employing less than 10 people, and 57% with less than five employees. QuickBooks estimates they have been able to save about 150,000 jobs through the PPP loans they have made.

Uncertainty in loan forgiveness still exists

Although funds are successfully getting into the hands of self-employed and sole proprietor businesses—and around $130 billion in PPP funding is still available—online lenders say uncertainty and confusion surrounding the PPP loans and rules for loan forgiveness may still be scaring off borrowers who qualify.

“They just don't trust the process,” said Petralia on why so much money is still left. “There's just a lack of information, and a lack of experience working with these types of products and the SBA.”

Voiles said figuring out how to use the loan is the hardest part for most businesses and noted that many customers are sitting on the money because they're uncertain on what it will take to get forgiveness. At Intuit, the same team that worked on their user-friendly PPP application is working on creating easy forms to apply for forgiveness, whether a small business got the loan through Intuit or another lender.

“If this can be clarified and simplified and made more flexible, we think the demand will increase dramatically, and the money will then be deployed much more quickly,” Voiles said.

Next steps and further assistance

Meanwhile, the U.S. House of Representatives on Thursday passed H.R. 7010, the Paycheck Protection Program Flexibility Act, which would allow small businesses more leeway on how to spend PPP loan money. The House bill lowers to 60% the current requirement that 75% of the loan be used on payroll and gives borrowers up to 24 weeks to use the funds, up from the eight set in the initial bill passed in March.

The Senate is expected to take up the bill next week.

“It is important for the administration to continue to effectively get PPP loans out to the self-employed, and for the administration and Congress to ensure that we have clear rules of the road so that it can be done effectively,” Quaadman said. “This is something that will be critical for us moving forward to recovery.”

The U.S. Chamber sent a letter to lawmakers Thursday morning expressing strong support for the Paycheck Protection Flexibility Act.

The U.S. Chamber has compiled several resources designed to help small businesses apply for funding. For how-to guides specifically for the self-employed and sole proprietors, click here. For additional resources and information tailored to small businesses, visit CO—by U.S. Chamber of Commerce.

About the authors

Lindsay Cates

Lindsay Cates

Lindsay is a senior manager on the communications and strategy team. She previously worked as a writer and editor at U.S. News and World Report.

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