Nothing has been smooth about the rollout of the U.S. Small Business Administration’s relief program for companies affected by the COVID-19 outbreak, according to Savings Bank of Walpole President Mark Bodin. But he said his team is working hard to get money flowing to struggling small businesses in the region.
As of Thursday morning, the bank had approved 167 loans for a total of $25 million, with the number expected to increase. Bodin said the amounts have varied depending on the businesses’ size, from as low as $5,000 to more than a million dollars.
Savings Bank of Walpole began reaching out to clients to make them aware of the opportunity as early as two days ahead of the scheduled rollout, which began April 3, according to Bodin. The bank started making loans available that same day. Banks have 10 days to make funds available after a loan has been approved, so those who applied early can expect to have the money as soon as April 13, he noted.
But with the program implemented in such a short time, lenders have been scrambling to get things up and running.
Wells Fargo, Citigroup and PNC were all still reviewing the program’s guidelines just hours before applications were supposed to be available, and JPMorgan Chase didn’t make them available until last Friday at 1 p.m., after originally saying they wouldn’t be available that day at all, according to The Washington Post.
Under the federal CARES Act, the $2 trillion relief package passed by Congress late last month, the Small Business Administration has been granted $350 billion to provide loans to small businesses that have been forced to close in an effort to slow the spread of COVID-19. The loans, made under the CARES Act’s Paycheck Protection Program, are available primarily to businesses with fewer than 500 employees.
Savings Bank of Walpole decided to get started as early as possible, Bodin said, which meant getting to work without having all the details. As new requirements and changes come down from Washington, D.C., he said the bank has been adapting “on the fly.”
He also said the Small Business Administration’s web platform has struggled to keep up with the increased demand for loans, causing it to crash on a couple of occasions, and that the unprecedented number of people and businesses looking to borrow money at the same time has been causing hiccups across the board.
“I think that overall, it’s just the nature of the volumes that we’re all dealing with. They’re just unreal,” he said. “I think the fact that it’s just something so unique, and it’s been rolled out so quickly, there’s just been a lot of inherent issues around clarity — clarity of process and clarity of documents.”
While Savings Bank of Walpole started making the loans available as soon as possible, other banks waited for additional instructions, Bodin noted, which has caused some delays at other institutions.
The objective of the Paycheck Protection Program is to keep payroll going at small businesses until restrictions requiring nonessential businesses to close are lifted. On Thursday, the U.S. Department of Labor reported that 6.6 million people had filed for unemployment during the week ending April 4, for a total of nearly 16.8 million claims since mid-March, when the crisis began in earnest.
“The intention of the program is to really keep paychecks rolling, to help people keep [employees] on payroll for the next eight weeks,” Bodin said. “The greatest part of the program is that it is potentially 100 percent forgivable.”
If a business can prove after eight weeks that 75 percent of its loan was used for payroll-related expenses, Bodin said, it will qualify to have the loan completely wiped out. The bank would be reimbursed by the SBA.
For those that don’t qualify for loan forgiveness, Bodin said, it’s still not a bad deal — a one-year loan at a one percent interest rate. But he thinks most borrowers understand the purpose of the money and will spend it in a way that qualifies them to have their loans forgiven.
In a news release issued Wednesday, U.S. Sen. Jeanne Shaheen, D-N.H., said she brought up some of the concerns about the execution of the program during a discussion with SBA Administrator Jovita Carranz. Shaheen said she was worried about reported delays in receiving approved funding and instances where potential borrowers experienced difficulty accessing the program.
She also advocated for ensuring that small banks have access to the support they need to meet the demand, saying those local lenders serve many of New Hampshire’s smaller businesses.
“Lenders need immediate and clear guidance on liquidity requirements as they issue this substantial quantity of loans,” she said in the release, referring to banks’ need to keep a certain amount of liquid assets on hand to fund cash outflows. “The administration has maintained that it’s up to the task of implementation, but we continue to see unforced errors and delays.”
The Sentinel also reached out to Mascoma Bank and the Cheshire County Federal Credit Union for comment on this story, but they did not respond by press time.
Bodin says he’s been hearing from his contacts at other banks that they’ve experienced similar issues as Savings Bank of Walpole. He said everyone is just trying to do the best with the resources at hand.
“We’re just flying,” he said. “I think that’s the story for all banks.”
These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.