INSUBCONTINENT EXCLUSIVE:
In a sign of just how broken the process is for startups looking to receive stimulus dollars, Silicon Valley Bank, the bank that claims
&more innovative startups bank with us than any other bank,& only just began processing claims today.
&Since the CARES Act and the PPP were
announced, we have been hard at work advocating for our clients to have access to this funding
We have been working around the clock to develop a process that works for our clients
Thousands of companies have indicated interest in the last several days,& a spokesperson wrote in an email
&We are currently accepting and processing PPP applications and continue to receive a high volume of interest
We will continue to listen to our clients and do everything we can to support their success.&
The stimulus loans that startups hope to
access were created to save jobs at companies affected by the government closure of non-essential businesses
The initiative is part of a broad range of measures meant to &flatten the curve& of the COVID-19 epidemic.
For startup companies, the loan
package has proven to be a source of nearly as much consternation as the government response to the COVID-19 outbreak.
&I&m a startup
founder who banks with Silicon Valley Bank,& wrote one tipster
&They are totally dropping the ball on the Paycheck Protection Program
Other banks began accepting applications on Friday, it now Tuesday and no word from SVB
Really bad for startups.&
For its part, Silicon Valley Bank said it was working around the clock to make sure its customers were able to
access the federal money.
Many companies and their investors are confused about whether they are even eligible for stimulus money — and if
they are eligible whether they should apply
Investors have refused to go on the record about the advice they&re giving to their portfolio companies.
Perhaps the clearest view of the
conundrum startups face has come from the Los Angeles-based investor Mark Suster, who &open-sourced& his own firm advice on how to approach
the Paycheck Protection Loans — the $
349 billion small business lending program at the heart of the CARES Act.
Still confused by the PPP Loan program? We've had to assist
dozens of companies so I thought I'd just open-source what we've been advising after consulting with the NVCA, our lawyers at Cooley -
numerous other VC firms.https://t.co/MBMOVqmD0i
— Mark Suster (@msuster) April 7, 2020
Small banks aren&t the only ones having problems
getting those much-needed stimulus dollars in the hands of the companies that desperately need them
Several businesses have been stymied in their attempts to receive loans through applications to larger banks.
Customers at Bank of America
href="https://twitter.com/Drkcbugg/status/1246126907244118017?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1246126907244118017-ref_u
rl=https%3A%2F%2Fwww.vox.com%2F2020%2F4%2F7%2F21209584%2Fpaycheck-protection-program-banks-access"> have reported being unable to apply for
the government-backed loans from the program without having an existing line of credit with the bank.
And those aren&t the only problems
The Small Business Administration, tasked with overseeing the loan process, is not equipped to dole out the nearly $2 trillion in government
funds that are expected to flow through the agency.
&If you can&t get the loan today or tomorrow, don&t worry,& Treasury Secretary Steven
Mnuchin said Tuesday on Fox Business
And if we run out of money, we&ll come back for more.&
Meanwhile startup entrepreneurs are left holding the bag
And their concerns are warranted
Even by the standards of other financial services firms, the Silicon Valley Bank response was slow
The loans became available on Friday and SVB only started issuing loans on Tuesday of the following week.
When asked when SVB first made the
loan applications available, the company said it started this morning.
&Due to the high volume, each company randomized notification of the
ability to apply did not appear all at the same time,& a company spokesperson wrote in an email.
It a sign of a broader failure in the
As one entrepreneur wrote in an email earlier today:
&Lots of startups (mine included) bank with SVB
The PPP loans are given out on a first come firstserve basis & so their screwup might result in thousands of startups not getting these
critical loans and we will have to lay people off.
SVBpromised to have the program up and running by 4PM PST yesterday
At 5PM PST they put a weak ass message on their website (link below) saying they regret missing their own deadline.
There has been no
subsequent communication from them and their phone lines are all disconnected
Relationship managers are not responding to emails or calls either.
LOTS of startup founders I know are furious, and rightfully so
We are going to lose 2.5x months payroll because our bank fucked up
It is ridiculous and we would expect better from a bank that prides itself on serving startups
Main street banks like Bank of America and Chase had their PPP applications up and running on Friday (April 4th) but only for existing
clients, so all of us startups who were dumb enough to rely on SVB are FUCKED
Switching to a new bank is not an option because a) all the branches are closed and b) the KYC process takes a couple of weeks so it too
