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6 ad agency leaders reveal the frustrating steps they're taking to get a loan from the government's $350 billion stimulus, and what their struggle says about the industry's future

Brian Moynihan
  • The $350 billion Paycheck Protection Program loan package for small businesses crippled by the coronavirus has been a source of controversy since it launched earlier this month.
  • Big chains like Shake Shack and Sweetgreen secured major loans, but some small ad agencies and PR firms say they've struggled to get money.
  • Even agencies that got loans said they were mostly in the dark during the process.
  • They also said the first round of funding for PPP was insufficient and that the ad industry could face a moment of reckoning when loans expire on July 1, even if Congress approves another round.
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Big restaurant and hotel chains like Shake Shack, Sweetgreen, and Ashford Hospitality Trust received millions in coronavirus stimulus package loans from the federal government, but some independent ad agencies and PR firms, along with other small businesses the Paycheck Protection Program was supposed to help, said they're struggling to get money.
The banks that handled the loans have received widespread criticism for the way they chose which companies would get the $350 billion first round of stimulus money, and an internal memo summarizing Bank of America talking points warned that the second $310 billion approved by Congress will not be enough to meet "extreme need and demand."
Business Insider spoke to six agency leaders. Three requested anonymity to speak candidly about the application process.

Some agencies said they got little help from the government or their banks

Agencies said there was confusion from the start as their banks, which managed the entire process, seemed unprepared.
A partner at one digital agency said he considered laying off several of his 50 employees as business screeched to a halt; he didn't even realize he might qualify for the PPP until an investor scheduled a call to discuss the loans.
The co-founder of a 10-person PR firm applied as soon as possible, only to be told by Bank of America that his business did not qualify because it didn't have a line of credit.
A Bank of America spokesperson told Business Insider the bank loosened its criteria the day after the application process began on April 3 to include any company that had an account as of February 15 and didn't have a relationship with another bank.
But the PR firm got the below form email days after PPP's $350 billion well officially ran dry on April 16.
Bank of America
Sam DiGennaro, CEO of PR firm DiGennaro Communications, said she repeatedly emailed JPMorgan Chase after applying for a loan and even tweeted at top executives like Jamie Dimon for information before getting a call last week confirming that PPP money had run out by the time her application was processed.
"We need to move at the speed of this virus or it will eat us all alive. A 900-pound gorilla just doesn't move that quickly," DiGennaro said in reference to Chase.
A spokesperson for the bank's small business loan division did not respond to a request for comment.

Some agencies that got loans said they were still in the dark 

Congress reached agreement on a new round of PPP funding, but the wait continues for hundreds of thousands of businesses. One is PR firm Sweat and Co., whose founder Jeff Sweat said he hasn't received any status updates beyond a call from a Bank of America employee who mentioned tax documents he had already submitted.
But even those that successfully applied and already received their loans said it was rarely clear what they had to do at any given time.
The digital agency partner said "nobody knew what was going on" during the application process.
In the absence of information, agencies speculated about why they did or didn't get loans.
The digital agency partner attributed his agency's success to the fact that he worked with Small Business Administration-approved lender Bank of the West rather than a bigger bank.
If the loan hadn't come through, he said he wouldn't have been able to retain all his employees.
A Bank of the West spokesperson declined to comment.
The president of a midsize independent agency speculated that banks prioritized helping larger customers. He said he thought his company had a significant advantage in working with a bank that also is one of his agency's biggest clients and filing its application before that lender's online portal crashed.
Three weeks after applying, the agency received a seven-figure direct deposit.

Agencies have furloughed workers and cut pay while waiting for updates

CEO Brian Salzman of influencer agency RQ said his agency was counting on a loan and has had to furlough 5 of its 32 employees. He also took a 50% pay cut and expects to forfeit more of his salary.
DiGennaro's 25-person firm cut pay and furloughed staff while waiting to hear about the status of its loan application.
The anonymous midsize agency president said PPP prevented him from having to lay off employees. But he doesn't plan to tell staff about the loan, because hiring and pay freezes will remain in place since the seven-figure sum only covers 50% to 75% of what his agency lost in client cuts over the past several weeks.
Salzman said owner-run restaurants and nail salons deserve the money more than agencies like his but expressed outrage about big chains getting loans and compared the process to a skewed lottery, adding, "It was such a clusterf--k."
The PR firm founder, who has lost around 40% of his company's revenue since March, said he has little patience with Bank of America.
"They got a $20 billion bailout in 2008. Don't get in the way of the people who paid for it," he said.

Some agencies have given up on getting any help

Agency execs said that the initial $350 billion wasn't enough, and that given how fast the first round of funding evaporated, it's unclear how many businesses will be covered by the $310 billion expansion passed by the Senate.
The digital exec doubted demand for marketing services would recover by the time the loans expire on July 1, and said agencies that got loans could face another reckoning at that time.
DiGennaro is optimistic but has begun exploring Facebook's small business grants program. She noted that, unlike Chase, Facebook allows applicants to qualify themselves as female or minority-owned businesses.
Salzman and Sweat said they don't expect to get any assistance.
"The sense we got from this is there's no help coming, so we're going to have to figure out how to save ourselves," Sweat said.
The Small Business Administration did not respond to a request for comment on this story.
Got more information about this story or another ad industry tip? Contact Patrick Coffee on Signal at (347) 563-7289, email at pcoffee@businessinsider.com or patrickcoffee@protonmail.com, or via Twitter DM @PatrickCoffee. You can also contact Business Insider securely via SecureDrop.
SEE ALSO: The CEO of McCann Worldgroup, one of the world's biggest ad agencies, says the coronavirus will change everything from real estate to awards shows
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* This article was originally published here
https://www.businessinsider.com/ad-agencies-describe-coronavirus-loan-program-uncertainty-ppp-2020-4
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