Jen Morrow is eagerly awaiting an update from her community bank, Sandy Spring, on a request for a loan of $ 30,000 for her bookstore, Bards Alley, in Vienna, Virginia.
Since the beginning of the coronavirus epidemic, Morrow has grown from 12 employees to just three, including herself, as her bookstore – usually packed with book clubs, coffee shop customers, and a community of readers – is now empty. She became creative, delivering books to homebound customers by bicycle with a nearby bicycle business. Meanwhile, she hopes and waits to know her loan.
“I try to run this business every day with a skeleton team, worried about my staff who are at home, and now I’m holding my breath because I don’t even know if I’ll even get a loan,” said Morrow. “There is no blame anywhere … I just don’t know how long it will take to review my request and get the money.”
The government’s $ 350 billion loan program aims to help small enterprises injured by measures taken to stem the spread of COVID-19. Since the start of the program, Morrow and other small business executives have been eagerly awaiting the advice of their lenders regarding loan approvals and are eager to see the much-needed lifelines in their bank accounts.
While entrepreneurs were quick to file applications with lenders on Friday, when the payroll protection program was launched, banks are slowly trying to disburse loans. Some banks say the Small Business Administration still needs some advice before they go ahead, while others say they are not yet ready to process the loans but are accepting the requests. Government officials had hoped the loans would be available the same day before the program, which is typically $ 20 billion a year, was put in place.
Jason Duff, founder of Small Nation, a company that works to revitalize small towns and villages, has worked with Bellefontaine, Ohio, to open consumer businesses in the city in recent years. He works with Richwood Bank, who told him and his partner, Adam Rammel, owner of the local Brewfontaine bathroom fixture, that they had been approved and that their loans had an SBA number.
“They told us:” you have been approved by the SBA and we will finance a separate account which you can use as soon as the SBA gives us indications on the need to have us sign anything before distributing funds “.” Duff said. “This seems to be the last step and what is delaying things to get the money.”
On Monday afternoon, the SBA said more than 2,400 lenders had been able to participate in the program, compared to 1,800 when the program started. A senior administration official also said that as of Monday, the administration would offer a helpline for lenders and that its 68 district offices across the country would be available to assist lenders.
But some lenders are holding back. Fountainhead Commercial Loans, one of 14 SBA non-bank direct lenders, did not start processing these PPP loans on Monday. A spokesperson for the lender said he accepted the requests.
Fountainhead founder and CEO Chris Hurn said last week that SBA had not provided adequate advice to service the lender’s “great” small business queue of loan seekers and warned that the most companies in their business “would be dissatisfied with the speed of the process”.
A senior administration official told CNBC that he could not speak on behalf of the banks regarding the advice they expected.
Banks submit requests to the SBA and obtain e-Tran loan numbers before they can take further action on loan disbursement. As of Monday afternoon, the SBA had allocated 130,000 loan numbers worth more than $ 38 billion. However, it is unclear how much of this capital has come into the hands of small business owners.
SBA administrator Jovita Carranza tweeted about a local North Carolina business that had received funding from its lender, but more detailed details on the total amount of funds loaned to businesses have not been made available, despite several requests.
Anne Harper, CEO of OMG Accessories in New York, said she was on hold waiting for more details from her lender, Chase. Harper received an automated email confirming receipt of her request and on Monday she was contacted to take a call for Tuesday.
“We know how important this funding can be to you and your business,” said the email.
Harper has grown from 20 employees to five with his company, which sells bags and accessories, including its iconic unicorn backpacks, online and at major retailers.
“I hope these loans we apply for will give us the funds we need to bring all of our staff back and that everything will work as it did before,” said Harper.
Barry O’Donovan of Kilkenny House in Cranford, New Jersey is eager to take out a second SBA loan for $ 159,000 through the PPP. He would be in addition to an existing disaster loan that was linked to damage to his store during Hurricane Irene in 2011. He plans to apply to Santander.
Meanwhile, it has grown from 30 full-time and part-time employees to 11. The restaurant offers curbside pickup six days a week from 4 p.m. to 8 p.m.
“We haven’t yet heard if Santander is ready to go – that puts us behind the eight-ball,” said O’Donovan. “I don’t know if other banks will deploy before them, and the money will disappear. I went into my private money and I lent to the business. It’s begging for the month and everything is fine. “