Wasch Raines LLP franchise attorney and Managing Partner Adam G. Wasch was recently quoted in Restaurant Brands Online article With PPP Fund Dry, Anger Turns to Banks written by restaurant industry expert and RB Online Executive Editor Jonathan Maze.
In the article, Maze addresses the growing furor with big banks and how they have handled Paycheck Protection Program (PPP) loan applications. With the PPP designed to provide immediate relief for payroll and rent to franchise and small business owners, many small business owners feel that big banks have been slow out of the gate in submitting applications and simply overwhelmed by the process. For example, Chase Bank only submitted six percent (6%) of “smaller” business clients in favor of getting commercial clients their $10 million loans.
After speaking with clients and following trends, Wasch has witnessed the shortfalls of big banks with the handling of the PPP loan applications submitted by Wasch Raines clients and small businesses all over the country. Small businesses have reported a general lack of transparency with big banks as compared to regional banks which enjoy personal relationships with their clients. The firm’s franchise clients which bank with regional banks, including for example, Union Bank & Trust in Lincoln, Nebraska, had no issues in Round 1 of the PPP loan funding program.
Now that the first round of funds have run dry, small banks are gearing up to submit PPP applications for Round 2. Unfortunately, Chase Bank has already issued a statement to its clients that the funds will run out but Chase is committed to submitting applications as quickly as possible for those businesses in “Stage 3.” Meanwhile, small banks have taken a personal approach to this process and have personally reached out to applicants to re-assure them that, once submitted, the PPP funds will be submitted for an e-Tran number and funded.
Small businesses all over the country that missed out on Round 1 and are in danger of missing out on Round 2 of PPP need to quickly analyze their banking options before Round 3 (if that should be approved by Congress). Small and regional banks are willing to take on new business clients and, in return, assist with PPP funds. Wasch told Maze that many businesses will be making such a move.
Small operators, meanwhile, were often left scrambling for a lender to take their loans, with many going to multiple banks and others shifting from their large bank to local lenders. Some believe the borrowers won’t go back—especially if those problems persist once the second round of funding is opened up.
“I think many small businesses will switch to local banks,” said Adam Wasch, an attorney with Florida law firm Wasch Raines, who represents both franchisors and franchisees in various matters. “This is traumatic for them.”
Wasch is advising unit franchisees, multi-unit owners, and area developers through this health and economic crisis caused by Covid-19. He has authored numerous articles related to the CARES Act and the various financial relief programs being offered by the federal and state government including the Payroll Protection Program and the Economic Injury Disaster Loan advances.
Wasch also heads the firm’s active franchise litigation practice area. The firm represents dozens of startup and emerging franchise companies as well as franchisees, franchise associations, and area developers in disputes both in court and arbitration.
About Wasch Raines LLP
Wasch Raines LLP is a business and franchise law firm providing a comprehensive range of services to emerging and established businesses and franchise companies in a variety of industries. Through its unique business model, the firm offers its clients the benefits of having a cost-efficient in-house general counsel and a full service litigation team. For more information, click here to contact us or call (561) 693-3221.
