Coronavirus Relief Loans Receive Overwhelming Demand From Small Businesses

WASHINGTON—Small businesses that had reported record-high optimism in recent years are now facing an unprecedented economic disruption caused by the pandemic. Fearing a cash crunch, business owners are flocking to their local banks to apply for coronavirus relief loans to stay afloat during the crisis.

Small businesses have applied for more than $40 billion in relief funds under the Paycheck Protection Program (PPP), President Donald Trump said during a White House press briefing on April 7.

The PPP loans provide an incentive for small businesses to keep their employees on the payroll. The businesses will be able to use that money to pay the wages, rent, mortgage interest, and utilities.

The loans, with a maturity of two years and an interest rate of 1 percent, are provided to businesses with fewer than 500 workers.

The U.S. Small Business Administration (SBA) stated it would fully forgive these loans, along with the interest if all workers are kept on the payroll for eight weeks. At least 75 percent of the forgiven amount should be used by businesses for payroll. Forgiveness is also based on maintaining salary levels. Hence, the employer cant reduce the wages, the agency stated on its website.

Lenders began processing loan applications on April 3. The program will be available through June 30.

“We applied and were approved almost overnight at the small bank we use for our business,” Ryan Stewman, a small-business owner from Dallas, told The Epoch Times.

His business, Hardcore Closer, provides an online learning resource for salespeople and the demand for his business has increased with the pandemic.

“We never planned on laying off anyone, and the PPP loan was just the cherry on top that helped us know we made the right choice,” he said, adding that he applied for the loan to “have extra cash flow in case of emergency.”

Teodor Panterov, co-founder of the start-up BroadwayPass in New York City, which offers discounted tickets to shows, however, has been severely hit by the pandemic.

“All Broadway shows are closed. Our business was hit really bad. We basically have zero revenue and no business whatsoever,” Panterov told The Epoch Times.

He applied for a relief loan of $156,000 and received preliminary approval from his bank, Chase. He plans to use roughly 77 percent of the fund for payroll.

“The reason why I applied for PPP is that we have three brick-and-mortar locations in Times Square and 22 full-time employees,” he said. “I am not planning to lay off the employees as we have a really strong team, and I try to support them as much as I can.”

However, applying for the loan was “a truly difficult process,” he said as the lenders website kept crashing.

High Demand Causes Delays

Some small-business owners have been frustrated by delays in getting these loans due to technical glitches and confusion. Some lenders also delayed the process, asking for more guidance from The Treasury Department and SBA.

“I know it can be frustrating for the borrowers because, obviously, theres a lot of anxiety and fear right now,” Patrick Ryan, president and CEO of New Jersey-based First Bank, told The Epoch Times.

“But I think thats to be expected when youre talking about trying to pull together something of this magnitude in such a short period of time,” he said.

According to Ryan, the fundamental issue is the exceptionally high demand and lack of capacity to handle the flood of applications.

“If you look at how challenging and cumbersome a traditional SBA loan could be, it really is quite amazing what the SBA has done to try to streamline this process.”

Ryan said his bank received 500 applications and will be able to provide the funds within a few days.

“Weve primarily been focused on trying to service demand from existing customers. If we get through that demand I think we will reallocate resources to try to help non-customers.”

Lisa Chu, owner of childrens formalwear website Black N Bianco, which is based in Los Angeles, has five employees and can only depend on the SBAs loan to keep her business going.

“This pandemic has been a nightmare for my small business. Everything has been canceled, from weddings to Easter,” she told The Epoch Times.

“I was very excited to see the PPP loan being offered; however, that excitement was soon lost when I found out my business bank is not offering this loan.”

Chu started searching for other banks, but realized they are only acceptingRead More – Source