Small business owners across America are outraged after the coronavirus aid program, designed to extend a financial lifeline, depleted its $ 350 billion fund less than two weeks after it launched – while lenders lagged with nearly $ 6 billion in fees Took home.
“We survived the economic hardship of September 11, 2001 and the economic downturn of 2008 that seems to have lasted forever, but I don’t know if we will survive the economic catastrophe of COVID-19,” said Candace Senato, who is a Tempe in Arizona owns a -based freight forwarding company for 28 years.
“I believe that the number of small businesses that have to close their doors will tragically far exceed the number expected,” said Senato. “I would like to know who received the funds and from which banks. So far, none of the small businesses we know like ours have received any money from our bank. “
The Small Business Administration opened two programs: The $ 350 Billion Paycheck Protection Program offered companies with fewer than 500 employees a loan that could be converted into a free grant when used to cover payroll and other eligible expenses and Employees are not fired. The Economic Injury Disaster Loan offers up to $ 2 million in financial aid to any business that suffers losses due to the pandemic.
But now that the money has run out on both first-come-first-served programs, business owners have only grown frustrated.
“This is crazy,” said Doug Yurubi, co-owner of the Benn Conger Inn in the Finger Lakes area of New York. He applied for the SBA programs as soon as they became available, but after having problems applying online, he was forced to print out and mail his documents. There were problems with it so he was asked to reapply online. But at that point the funding was gone.
“It’s frustrating because the window of opportunity to keep business running is so small,” Yurubi wrote. “That is not right.”
While some clients, especially those with community banks, have reported successes having successfully passed the program, many small business owners are waiting for a lifeline that they are not sure will show up.
On Friday, the SBA has published the first final invoice the depletion of funding for the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act for the initial stages of the PPP program. A total of 1,661,367 loans for $ 342,277,999,103 had been approved by 4,975 lenders as of Friday noon, the SBA said in a press release.
The total approved amount was below $ 349 billion as roughly $ 6 billion was accounted for in lender fees as required by law.
The top five industries that received the loans, in descending order, were construction, services, manufacturing, healthcare, and lodging and catering. These loans made up almost 60 percent of the total.
California received the most PPP loans at $ 33 billion, followed by Texas ($ 28 billion); New York ($ 20 billion); Florida (nearly $ 18 billion); and Illinois (nearly $ 16 billion). Three quarters of the loans were for $ 150,000 and under. Four percent of the loans were in excess of $ 1 million, accounting for nearly 45 percent of the total money paid out.
Despite the promised financing sums, the largest private customer banks in the country were largely unable or unwilling to provide information on how much money was actually deposited into the customers’ bank accounts.
Chase announced this week that it has debited approximately $ 14 billion in accounts. Citigroup said it received $ 3 billion in applications. Bank of America said it received over 330,000 applications, and CEO Brian Moynihan said “thousands” had been approved by the SBA. Wells Fargo said it has received over 370,000 “expressions of interest” and “some” of those customers have made formal requests. the Minneapolis / St. Paul Business Journal reported.
“We will continue to prepare applications in our existing small and medium-sized business pipeline and submit them to the SBA when the funds become available,” Wells Fargo spokeswoman Vickee Adams told NBC News. “We are ready to serve the hundreds of thousands of customers waiting for this much-needed help.”
Despite the challenges and uncertainties, experts say small business owners shouldn’t give up.
While both Republicans and Democrats are looking to replenish the funds, they’re unlikely to settle their differences over how to do it and whether to create closures for vulnerable groups and increase funding for hospitals and state governments before Congress in May will be resumed.
In the meantime, small business owners can still apply to the many banks that are still accepting and processing applications in anticipation of additional funding. If you’ve already applied, you should keep working with your banker to make sure all papers are ready, said James Brower, a partner at Marks Paneth, an accounting and advisory firm.
“Gather data and apply to at least enlist,” Brower said.