Federal Coronavirus Bailout Program Is 'Frustrating And Disappointing' For Some Small Business Owners
Many small business owners that have had to close or lay off employees due to coronavirus still have no idea whether they will receive loans from the federal Paycheck Protection Program.
In theory, small businesses were able to begin applying on April 3 for the $349 billion in loans, which Congress created as part of the Coronavirus Aid, Relief, and Economic Security Act.
But many banks did not begin accepting applications immediately, while others have already shut down after being overwhelmed by the demand.
All day Friday, Jovita Carranza, who heads the Small Business Administration, regularly tweeted enthusiastic updates on the billions of dollars in loans approved.
By 8:40 a.m. on Friday, the SBA had already approved $875 million worth of loans.
By 11 a.m., it was $1.8 billion.
By 4:30 p.m., it was $5.4 billion.
Small business owners around the country were watching the numbers tick up, and panicking as they tried, and failed, to apply for loans of their own.
"We're seriously afraid there will be no money left by the time anyone accepts our application," said Kimberly Austin, who owns Fire Starter Studios in Burbank, and has been unable to apply with either Wells Fargo or Chase.
Last week, Senate Majority Leader Mitch McConnell (R-KY), pledged to work with the Senate on Thursday to get more money for the program.
In an interview today on Fox Business , U.S. Treasury Secretary Steve Mnuchin said, "If you can't get the loan today or tomorrow, don't worry. There will be money. And if we run out of money, we'll come back for more."
Steve Grandjean said he tried to help his mother put in a loan application with US Bank for her business, Nicole's Market & Café in South Pasadena, on Monday but was rejected on without explanation.
He filled out a form on the Chase website for a PPP loan for his business, Gourmet Imports, and was told a banker would be contacting him soon.
So far he has heard nothing.
Aaron Rice, whose company, Authentic Foods, manufactures gluten-free flour in Gardena, spent last week calling Wells Fargo, preparing his application. But on Friday, the bank wasn't processing applications.
Then, on Monday morning, his banker called, and said he was out of luck: Wells Fargo had briefly accepted applications on Saturday but had hit its loan cap and was no longer accepting new applications.
In a statement, Wells Fargo clarified that they were only able to loan $10 billion to small business owners due to an agreement with federal regulators over its previous, fraudulent creation of bank accounts to meet sales goals.
"I don't know how people found out about the application opening up at Wells Fargo unless they knew someone," Rice wrote in an email. "This is really frustrating and disappointing."
Bank of America, meanwhile, told many of its long-time customers on Friday they were not eligible to apply for PPP loans because they did not have a line of credit with the bank.
After a public scolding from U.S. Sen. Marco Rubio (R-FL), and after thousands of angry customers took the company to task on Twitter, the bank reversed its policy.
.@BankofAmerica got bailed out with $45 billion of your tax money— Marco Rubio (@marcorubio) April 3, 2020
But now just heard from #smallbusiness with a BOA account & a 400k line of credit they paid off
BOA denied #PPP loan because they don't have a credit account
A ridiculous requirement that isn't anywhere in law
"I don't think it is right that BofA prioritized their lending borrowers over other business account holders who don't owe them money. They only served their interest," Robert Baker, who owns Matrix Equity in Mission Viejo, wrote in an email.
SMALL BANKS FOR THE WIN
A number of small business owners said they had better luck applying for a PPP loan through a community or regional bank.
Jenette Goldstein, who owns the custom bra-fitting boutique Jenette Bras, was able to apply for a PPP loan through Bank of the West after, "striking out with Wells Fargo."
Banks had less than a week to prepare to administer the Paycheck Protection Program and the U.S. Treasury was still publishing new information hours before the program was set to begin.
Leon Blankstein, who heads the American Business Bank in downtown Los Angeles, said the tight timing gave an advantage to smaller, nimbler banks like his.
"They're big companies," he said, referring to larger banks like Citibank and Wells Fargo, "it's difficult for them to turn the battle ship around."
By Monday afternoon, Blankstein said the Small Business Administration had already approved $150 million in loans for his bank's clients, and he was getting multiple calls from people who had been turned away by larger banks.
On Fox, Mnuchin acknowledged banks are overwhelmed with loans, but he said they are, "doing a great job."