Tears of joy, 20-hour days: Virus aid trickles to small businesses

  • In this Saturday, April 11, 2020 photo, Virginia Miller, of University Heights, picks up an order from Veronica Tessler, business owner at Yotopia in Iowa City, Iowa. The local frozen yogurt shop was one of several restaurants in the area to receive an Iowa Small Business Relief Grant to help sustain it through the coronavirus shutdown. (Rebecca F. Miller/The Gazette via AP)

At least some small businesses have begun receiving funds under an ambitious Trump administration effort to blunt the coronavirus pandemic’s economic fallout, though lenders continued to report technical glitches and mom-and-pop firms complained they still couldn’t get loans.

The launch of the U.S. Small Business Administration program to distribute $349 billion in aid to small business owners has been fraught with a barrage of applications, a lack of clear rules and an overwhelmed system that froze last Monday, meaning that no one could process loans for hours.

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The clock is ticking for millions of business people who have been forced to close under shutdown orders and face laying off employees and possibly going under in a matter of weeks or even days.

Despite the problems, Celtic Bank in Salt Lake City, Utah, deposited money in the accounts of borrowers throughout the U.S., according to Chief Executive Officer Reese Howell. His staff has been working 18- to 20-hour days to manually process the loans, he said.

“Yes, we have money flowing,” Howell said in an interview, adding that the bank would soon be able to automate much of the process. “I have customers call me in tears thanking me when they’ve received the money.”

The SBA’s coronavirus loan program got off to a rocky start. Lenders complained about not having enough guidance to process loans and problems connecting with the SBA’s system. Some borrowers reported not being able to submit applications because they didn’t have an existing relationship with banks.

The SBA’s Paycheck Protection Program is part of the $2 trillion stimulus package intended to shore up the economy. It offers loans of as much $10 million that convert to grants if firms use the funds to keep workers on their payroll and maintain salaries.

The Treasury Department is asking Congress for $250 billion more for the program and Senate Majority Leader Mitch McConnell said the Senate could act as soon as this week to authorize additional money.

Still, some small business owners did get money in their accounts the very first day. Tanya Weinreis, who co-owns the Mountain Mudd Espresso coffee business in Billings, Montana, along with her husband, got news about her SBA loan approval at noon on Friday.

The loan kicked in at the right time, she said. She’s only had to close two of their 11 locations and hasn’t let any of her 50 employees go, even though she had one day when “we sold $13 in coffee in a seven-hour shift.”

The National Federation of Independent Business is still hearing more complaints from members than about firms getting funding, said Karen Harned, executive director of the federation’s Small Business Legal Center.

“I’m just hoping each day gets better,” Harned said.

The 30 million small businesses in the U.S. employ half of the private work force, and many have been forced to close amid stay-at-home orders. Almost a quarter of firms have shut down temporarily, and one in 10 are less than one month away from permanently going out of business, according to a poll released April 3 by the U.S. Chamber of Commerce.

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The SBA said that as of last Tuesday, it had received more than 275,000 applications valued at $75 billion since the program went into operation. That amount hasn’t been given to firms yet, but represents the value of loans SBA has registered and guaranteed for lenders to complete the process and disburse funds, according to a senior administration official.

That would mean about 20% of the $349 billion appropriated for the program has already been committed.

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