I have that happy but scared feeling… I posted my first public comment on the Federal Register today regarding the PPP rule

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I posted my first public comment today on the Federal Register on the PPP rule. You can see from the screenshot, it is awaiting posting. I am curious how they determine what to post or not post.

I was scared of publicly posting because it’s public, unlike when I write a letter to a senator or representative. I am publicly sharing my opinion, and while anyone could read it, technically, since it’s public, it also could be read by all these well-respected, high ranking government officials. Gee, I just used the word public way too many times in this paragraph. Sorry.

I will likely be scared to check my emails for a week in fear of some angry stranger wanting to discredit me or trash talk me, but I hit submit anyway. What if they hate it? What if I have a spelling error? I tell my kids that to grow is to learn, fail, and keep trying. If I let fear of the unknown stop me, I am letting the great unknown silence my voice and keep me from contributing to the world I want this world to be. I’m glad the new Aladdin movie came out – that “I won’t be silenced” lyric from the song Speechless totally kept playing through my head and helped me press send.

My advocacy theme song. Play this if you’re scared to speak up and advocate and let the lyrics encourage you!

This literally took me an an entire working day’s worth of effort to do. No one is paying me for this advocacy work, but I figure I can’t complain about the state of our nation if I don’t express my opinion in a format that has some chance of being actionable. I’m lucky that I have a consulting practice that gives me the flexibility to have the time to do this, if also unlucky in that with COVID-19, my client workload is light enough that I have the time to do this. LOL.

Not being Trump, I don’t consider tweeting about it to be actionable, as no one is going to do anything significant based on one of my social media posts or tweets. Trump probably gets more comments on one post or tweet than I have in total followers, ever.

That said, if nothing else, I’ll feel better having posted this and felt like I did my part, even if the only person who reads it is the person who has to approve or disprove my comment for the Federal Register. 😛

I’m attaching the official letter here, in case you want to read it. Here it is:

Inspired? Want to write your own comment? Here’s the link to the PPP rule on the Federal Register. Comment away! https://www.federalregister.gov/documents/2020/04/15/2020-07672/business-loan-program-temporary-changes-paycheck-protection-program#open-comment

I didn’t want it to seem like a total rant of my own travails with trying to get a PPP loan or those of the clients I have worked with. I also didn’t want to lower the credibility of my data-based analytical commentary by sharing some of my private suspicions or musings regarding human motivations, business pressures, and how this might be affecting things. But they were still in my head, so I figured I’d share them here. Please forgive me if it’s not super organized. These are the essentially a collection of thoughts that didn’t make the official cut for my public comment on the Federal Register.

Its OK that some companies got millions. When the government is talking about small business, they define small business as all businesses with less than 500 employees. Sure, if you’re a micro-small business like me, with less than 20 employees, 500 employees seems huge. So I feel ya. Also, if you read the report, you’ll see that numerically, 89% of all “small businesses” are those with less than 20 employees. So we are a big voice who should be heard, and no, I don’t think we got a fair shake.

At the same time, I feel like companies who applied and got millions of dollars through the program don’t deserve public shaming. They didn’t do anything wrong that I know of. Additionally, I think significant argument could be made that the government should be helping them stay in business. Should it be big guys over little guys? No. Trying to simplify smart long-term decision making in giving out funding can be effective, strategically, with such a limited criterion as size as the only factor in whether it should or shouldn’t be done.

In fact, if there’s anything wrong, my opinion is that its in how this rule was written, and how it didn’t take into consideration things that to me are part of basic business strategy and psychology. In a company, if I don’t like the actions of an employee who is following some corporate policy I disagree with, do I blame the front-line employee for doing what the boss says, or do I blame the boss for making the rules and telling him what to do? You may be the type to yell at the employee. Me, I blame the boss. The employee is just the poor schmuck getting yelled at, who is just trying to follow the rules and keep his job.

The analogy here is that we’re yelling at companies who followed the rules, instead of criticizing the rule maker. Thankfully, enough people criticized the rule maker that some effort has gone into improving funding round 2, but I still think it is too little change, and still too short sighted. Hence, me putting in the blood, sweat, tears, and writing this comment and publishing it on the Federal Register so that I have some level of comfort in knowing that my alternative type of opinions have at least been registered. Being acted on is out of my hands, but at least I’ve provided another viewpoint to consider, and I directed my “yelling” where it has the potential to do the most good.

I do feel that the guidelines allow too much leeway for slippery corporate officials who may only be worried about their own stock and/or income to be legally following the rules, but in an unethical way. This is based on my personal experiences with the PPP program.

Let’s start with the fact that the SBA provided a 2 page form and pretty much said someone should be able to show up with that form, some very basic proof of payroll, and get rubber stamped on their way to funding. Sounds simple, right?

Technically, it should be. So why are small businesses falling behind? First, while the rule only loosely specifies that borrowers much provide “payroll documentation” and the SBA application form itself is only two pages, lenders are requiring significantly from applicants than just filling in the form. These online systems have a myriad of roadblocks that adversely impact small businesses. These roadblocks might be just in getting stuck with bad code that doesn’t work because they just threw it up in a rush. Or in not being able to even start an application because you aren’t a member of the bank and you can’t login to apply, and the application is behind a member-only type of paywall.

Now that I am a small, independent consulting business (in the under $40k PPP loan request category), rather than a CFO of a multi-million dollar organization, I can provide personal testimony to the roadblocks that I faced. 

I completed the SBA loan PDF and attempted to submit it to my primary bank via email (a national chain) with what I thought were reasonable attachments. This was not considered a valid application. They wanted me to submit via their own online portal, which was buggy and would not let me complete the application in full. I emailed them about this and was told they were working on fixing the bug. Before this was fixed, the funding had run out. They next informed me that only those who already had an application in the queue would be allowed to apply when the second round of funding opened. Once again, since my application had not been able to be saved since their online application was buggy, though they had technically received my completed application PDF in advance, I do not count and cannot apply through them. Thanks for nothing, “big bank.”

Next, though the funding had run out, in order to be prepared for the next funding round, I contacted a lending broker who was processing PPP loan applications that I hoped would have a lending partner small enough to access to any funds set aside for smaller lenders. They also had their own online application processing method, but at least it let me successfully complete  the application. However, while I received an automated email that they have my submission, I have not heard anything back from them. 

So that’s what happened. Here’s my THOUGHTS about what happend.

First, I think it’s wrong that filling out the SBA form and sending it to the lender via email does not count as a valid application, and does not get me queued. I believe that this was the intent of the “first in, first out” part of the rule. I should be “In” and yet since I couldn’t jump through the additional, non-SBA required hopes that the bank invented on their own, my application is not queued higher up in the “first in-first out”? Uncool, bank. Very uncool. And uncool that the rule allows this loophole. I also am worried that this loophole allows banks to deliberately focus their time and effort on processing “big fish.” As I show in my calculations in the public comments, the bank and its agents stand to make 10x more money for the same amount of effort rubber stamping a big loan, compared to my tiny one.

So am I saying we should start yelling at the lenders, now? Not necessarily. I am saying they are slippery corporate weasles, but it’s thier job ot be, so our public officials need to write legislation with that in mind, and keep them from being incentiviced for profit above what might be considered the overall good of the people, or in ways that substantiallly adversly effect groups that our nation normally tries hard to advocate for.

One might argue that an ethical or moral imperative should require banks to process loan requests on a first-come, first serve basis, we must remember that banks are not nonprofits. They, like all other businesses, can expect a negative impact on their income as companies—their clients—close their doors or generate less revenue. Could one not argue, then, that, in order to keep from having to lay off any of their own employees in the future, it would be in the best interest of any bank to bring in as much PPP loan revenue as possible, against a future rainy day? Especially when it is known that there is a cap on how much loan funding will be distributed?

If I was a 4 million dollar customer, would I be pissed if my bank didn’t process my application? For sure. If my business survived, would I hold a grudge and leave them? Highly likely. I’m a small fish, and I am already holding a grudge against my bank and pondering leaving them later this year. But they know this. AND they know that it will hurt them a lot more to piss off the big fish, than me. It’s just common sense. The way the world works. The way capitalism works. Don’t live in a capitalist country if you constantly want to blame worker-bees for acting like capitalist. Its our national culture. At the same time, I think that the role of government legislation is to create guidelines to protect small fish who have little voice of their own from being stepped on, over, and smushed, by the big fish of the world, and to create more of an even playing field so that fish of all sizes have a place and can thrive. The current gaps in this rule, in my analysis, are not making the grade in doing this basic job function, and thus, need revision.

I also have concerns that some of the hassles smaller businesses face may be deliberate on the part of the bank reps. For example, if I had been a $4m loan client and the bank stood to make $40k in lender fees, would they have found some way to process the PDF/email I sent in before the first round of funding ran out? I suspect they would. I would love to participate in a small business class action lawsuit to make banks like my big bank demonstrate that they did not do any of this unethical stuff to steer and facilitate big clients over little clients. Unfortunately, even though its unethical, there is no law I know of to rake them over the coals for violating that prohibits preferential treatment based on the size of a client’s wallet.

Also, I was originally told (and one of my clients said they were told by their bank) that they had to have their P&Ls current through the prior month in order to apply for funding programs. Once again, I don’t see proof that this is a requirement anywhere in the legislation. Also, even if this is a legitimate requirement, as-written, this has an adverse impact on small businesses.

Larger businesses have dedicated staff in CFO, controller, and bookkeeping roles who have the time, know-how, and relationships to learn about new financial programs like PPP, and to be able to quickly deliver to their bank the required financials and other required paperwork for the loan. When I held prior roles as controller or CFO of multi-million dollar organizations, I had a team of bookkeepers working for me, and my books were updated weekly. I usually closed my books for the following month within 5-10 days of prior months end. As a fractional CFO working with smaller businesses that can’t afford a full-time bookkeeper let alone a CFO, clients often lag 3 to 6 months behind on paying for bookkeeping to be completed.

So when a small business comes to me, months behind on thier books, but needs them now, stat, becuase they are told they have to have them to apply, what do we do? They’re broke, that’s why they’re applying for the loan. I have staff and bills to pay, and haven’t gotten my own loan, so I can’t work for free. Is a small business supposed to take out a crazy high interest paycheck loan or title loan on thier car, just to pay me, so that they can jump through the bells and whistles to apply? And, if they DO pay my company to do their books, it takes time. The fastest bookkeeper in the world can’t pull together months worth of books in a day. So then the money is gone, and the bank kept the small business from even being considered “in line” for funding, because the bank doesn’t count the application until the bank, in their own opinion, thinks they have everything they need, like the P&Ls.

But would they have asked for P&Ls if it was their big client? Or would they have pushed the application through, and just told the customer that they would need to provide the P&L’s later as part of verifying that the funds spent (once they got the loan) were spent on the right, approved categories?

This is pure speculation on my part, I have no substantiation for this unless some lawyer type can get an investigation into this. If they did, I’d also like all the programmers who worked on this websites interviewed, and their communications audited. I don’t like to think ill of people, but as a controller, I am trained to think of all the worst case scenarios and how people can take advantage of you, if you aren’t smart enough to think of those loopholes and block them, first. So, in applying this to all the problems smaller businesses have had in getting funded, it makes me suspicious. If I was a bank manager looking to capitalize on my bank’s revenue with a limited window for funding, I wouldn’t rely on my customer service staff to weed calls or only handle the biggest ticket clients — I would tell my programmer to prioritize coding the parts of the online form submission specific to big customers first. And when addressing trouble tickets, I would prioritize trouble tickets affecting big customers first. And when creating a task-queue for staff to process loans, I would have my queue designed so that it automatically queued the largest loan applications to come in for processing. The rule just says “first in, first out” it doesn’t specify “first loan application to cross the lender’s desk has to be the first one submitted.” This isn’t feasible because the loan application could be incomplete or missing data. It just means the first one approved by the lender and officially sent to the SBA is supposed to be the first one paid out by the SBA until no money is left.

I think some additional auditing and oversight is needed, as well as some improvement in financially aligning the goals of the lenders with the goals of the people. This is why I think psychology is such a big part of what makes effective, versus ineffective rules, technology, or processes of any kind. If human natural motivations are misaligned with your desired outcomes, it’s always going to be an uphill battle to get what you want.

Even in my own work, I know that when I’m not getting the desired outcomes I want, the most likely reason for me not succeeding is that I haven’t spent enough time and energy in understanding my target audience to be able to devise an effective strategy to win them over to my way of thinking. But there are only so many hours in a day. So I pick my battles and give myself grace for the ones I don’t have time to prioritize and have to let go.

Do I actually think my comment will have an effect? If I had to give myself odds, I’d say probably under 5% chance that they’ll do anything that aligns with any of my recommendations. I’m only giving myself that high of a percentage because I feel like there is some pretty clear numerical data to support my position, and a lot of other people, while not pointing out the numbers in the specific way I did in my commentary, have shared similar or at least, aligned viewpoints.

If you want to up my chances, and agree with my comments, post your own. If enough of us little people post, eventually it will effect change.

Once again, here’s the link to the PPP rule on the Federal Register. Comment away! https://www.federalregister.gov/documents/2020/04/15/2020-07672/business-loan-program-temporary-changes-paycheck-protection-program#open-comment. They even have some suggested guidelines on writing effective comments. I did read and try to follow them. It didn’t say anything about suggested length, though. So I am worried I might run into a TLDR (to long, didn’t read) problem. I have such troubles writing anything short, though!

If you actually read all the way to this point, I really, really appreciate you. 🙂


  1. Post

    The federal register still hasn’t approved my comment for posting. Today, I emailed 2 newspapers and one news channel and send them the links, asking them to consider digging into this further. If anyone else knows any other “watchdog” investigative type sources that I should contact, let me know. I also called and left a voicemail for Congressman Steven Horsford last week, but didn’t hear back from him, either.

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