Small businesses struggling to survive as PPP loan funding runs out

Small businesses are left in the dark after PPP loan funds dry up.

Posted: Apr 16, 2020 6:22 PM
Updated: Oct 1, 2020 9:37 AM

The U.S. Government’s emergency small-business lending program is out of money, just as banks were able to begin processing PPP loan applications. Now, local small businesses are waiting and wondering what’s next and if they’ll get the aid they qualified for.
Many banks were slow to process the new loans as a part of the CARES Act.

“I went to my bank’s website and on their page, it had a banner that said ‘coming soon’ and to stay apprized of any breaking developments,” said Paul McMahon, the owner of Grass Shack Café in Phoenix, “that was about a week, week and a half ago. Then they opened it up but they had some problems with the feds and reserve requirements and such.”

McMahon’s situation is not unique, many other local small businesses are dealing with the same issues.

“We have the application but the bank is not taking any applications right now because they have too many, they said,” said Javier Cruz, the owner of Simple Café in Ashland.

McMahon even tried to apply for the PPP loan with a second bank to get the process moving as fast as possible.

“I went to the Small Business Association (SBA) cite initially and it said you should apply to two banks so I applied to another bank we do business with as well but I never heard from them,” said McMahon.

A few fortunate small businesses were able to get a jump on the process early and were able to get a PPP loan that has enabled them to continue critical actions, like paying employees.

“We actually had out application in before the deadline, on the first day it was going to open,” said Pat Sahey, “We have a very good relationship with our lender, Peoples Bank. Two weeks ago, today, we filed and we received the proceeds on Tuesday, so it took about a week and a half. We were very early in the process and at the top of the queue.”

In a statement released by Representative Greg Walden (R-Hood River), more than 1,100,000 loans have been approved for small businesses and almost $270 billion loans have been processed. As of April 13th, Oregon had 9,508 approved loans and received $2,427,776,445 in approved dollars from the PPP.

Unfortunately, that wasn’t enough.

“I woke up this morning hearing on CNN that the program has expired. The funds are gone,” said McMahon, “so I don’t know at this point if I, who actually moved expeditiously as possible to get this, will get the loan.”

Yesterday NewsWatch 12’s Alicia Rubin spoke with Ken Trautman, the CEO of Peoples Bank about what would happen if PPP loan funding ran out.

“Surprisingly, it’s gone longer than I thought,” said Trautman, “A lot of banks were a little slower getting involved with the process, but it won't last much longer. Once it's done, then we can't get an authorization from SBA, so there'll be no funds guaranteed.”

Senator Jeff Merkley spoke with NewsWatch 12’s Alicia Rubin last week after he called the PPP loan plan “botched.” According to Sen. Merkley, small businesses are not seeing fair treatment from banks.

“We're seeing one bank saying it's capitalization is insufficient to do more applications, that's Wells Fargo,” said Merkley, “we have others that said they're just going to focus on folks they have relationships with, so the door is closed. In fact, we called through the banks and credit unions that were eligible and found only four that said they would take applications from folks I don't have a relationship with.”

Some banks are doing all they can but are facing their own hurdles.

“They took a program that SBA used for 50 years and added the PPP program to it and then modified some of the rules,” said Trautman, “so what used to be ineligible is eligible under PPP. We’ve been trying to learn the rules.”

In a statement released to NewsWatch 12, Umpqua Bank said, “Over the past few weeks, Umpqua Bank’s top priority has been to help as many small businesses as possible survive this crisis and keep their workers employed. We worked around the clock to get a process in place for PPP by the April 3 go-live date and were the first bank on the West Coast ready to accept applications that morning. Thanks to our amazing team of bankers and associates, who have been working around the clock since the program went live, we have processed and approved nearly 7,000 SBA loans totaling more than $1.4 billion in funding for small businesses. Though all initial SBA funding has now been allocated, we are continuing to process applications so businesses still needing aid can get the relief they need if and when additional funding is made available by Congress.”

Lawmakers met today to try to reach an agreement on a package that will immediately increase program funding. If a deal isn’t reached, not only will the program go without replenished funds through the weekend, but possibly through the rest of the month.

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