Massive Federal Loan Program For Small Businesses Off To Rocky Start
Today is the first day that small businesses affected by the COVID-19 pandemic can apply for $349 billion in loans from the Paycheck Protection Program, which is part of the stimulus package passed by Congress last week.
But that money might not last long or get to the people who need it most.
HELPS TO KNOW A GUY
The small business owners with the best chance of receiving a loan are those that already have a relationship with a bank and have their finances in order -- like Steve Grandjean, who runs Gourmet Imports in Alhambra.
He spent all week talking to bankers about how to apply for the Paycheck Protection Program. Those loans will be forgiven if business owners use them to pay employees' salaries, rent and utilities.
"I'm being very proactive about reaching out to everyone I know," Grandjean said. He asked his banker if there was some way to put his application at the front of the line because he worries the Small Business Administration, which is backing the loans, will be "completely overwhelmed."
"IT'S UNIMAGINABLE HOW BIG IT IS"
Indeed, by 8:40 a.m. on Friday, banks had already processed $875 million worth of loans. By 11 a.m., it was $1.8 billion. By 4:30 p.m., it was $5.4 billion.
Latest #PaycheckProtectionProgram numbers: 17,503 loans valued at more than $5,400,000,000. @SBAgov + over 1,100 local lenders helping small businesses stay afloat with working capital to keep employees paid + doors open.— Jovita Carranza, SBA (@SBAJovita) April 3, 2020
Leon Blankstein, who heads the American Business Bank in downtown L.A. and said he has not slept in two days, said the demand for these loans from his clients is "incredible. It's unimaginable how big it is."
He said it's a race to get loan applications in before the money runs out. In fact, his co-workers are taking bets on how soon that will happen -- a few hours, a few days?
Blankstein worries that because the money could run out quickly, it won't get to the small businesses that need it most.
"You ask one of our vendors who sells clothes on the sidewalk, she's not even aware, probably, that the loan is available," said Rudy Espinoza, the director of Inclusive Action for the City, a nonprofit that helps street vendors.
Many street vendors likely wouldn't be eligible for the Paycheck Protection Program anyway. The form originally said applicants must be a U.S. citizen or permanent resident to qualify. The application has since been updated and no longer has that requirement, but still requires an EIN or an SSN.
That means L.A. County's approximately 1 million undocumented immigrants are left out.
"It's just like anything else that we do," Blankstein said. "It's really not getting to the people who need the help."
OFF TO A ROCKY START
By 10 a.m. on Friday, there were already signs that many small business owners were struggling to apply for the loans.
People complained that banks they already had existing relationships with -- specifically, Bank of America -- were disqualifying them.
@Hugh_Son @BankofAmerica @SBAgov #ppp #fail Really? BofA - your records are wrong. I have 4 small business checking accounts with you since 6/2014. 12 current employees. pic.twitter.com/C4aNn7I6KQ— George Anderson (@twitchis4) April 3, 2020
Others complained their bank's website kept crashing.
@Chase @ChaseforBiz— Ryan (@Kane_fitness) April 3, 2020
When will the SBA PPP program be ready? Your website is constantly crashing and you have not communicated ANYTHING to your customers via email or twitter. We need answers.
Others said their banks weren't even taking applications yet.
U.S. Sen. Marco Rubio (R-FL) took some of those big banks to task on Twitter in a video posted from his home.
Hearing reports that some big banks are creating unnecessary restrictions on #SmallBusiness applying for #PPPloan pic.twitter.com/UhllrZhYpy— Marco Rubio (@marcorubio) April 3, 2020
Have you applied for a Paycheck Protection Program loan? KPCC/LAist reporter Emily Guerin wants to hear from you: email@example.com or on Twitter @guerinemily.
This story will be updated.
MORE ON CORONAVIRUS:
- Your No-Panic Guide To Coronavirus In LA So Far
- Where To Get Financial Assistance, Food And Other Help
- Tracking The Spread Of COVID-19
- Have A Question? We Will Answer It
DON'T MISS ANY L.A. CORONAVIRUS NEWS
Get our daily newsletter for the latest on COVID-19 and other top local headlines.
Support our free, independent journalism today. Donate now.
Cruise off the highway and hit locally-known spots for some tasty bites.
Fentanyl and other drugs fuel record deaths among people experiencing homelessness in L.A. County. From 2019 to 2021, deaths jumped 70% to more than 2,200 in a single year.
This fungi isn’t a “fun guy.” Here’s what to do if you spot or suspect mold in your home.
Donald Trump was a fading TV presence when the WGA strike put a dent in network schedules.
Edward Bronstein died in March 2020 while officers were forcibly taking a blood sample after his detention.
A hike can be a beautiful backdrop as you build your connection with someone.