More than 35,000 Oklahoma small businesses received loans from the federal $2 trillion stimulus plan last week, but thousands more are stuck waiting for a refill for a program that blew through $350 billion in less than three weeks.
Steve Bullock, president of Fail-Safe Solutions LLC in Oklahoma City, applied for a loan through the Paycheck Protection Program the first day his bank began accepting applications.
Soon, he might be able to receive that loan.
“I think the first try the site went down, I guess because of the number of people applying,” Bullock said.
As the Small Business Administration ran out of money for protection loans, Bullock received word that his bank was on phase two of four of vetting his application and were planning to continue reviewing applications despite the funding shortage.
Bullock’s company, a government subcontractor working in research, development and engineering for defense and commercial business, has been hit with a slow down in business due to travel bans and restrictions as well as lower payments coming from prime contractors.
Fail-Safe, which employs five people, has enough cash on hand to make it through the next month, but Bullock, a retired Army intelligence officer, says he is looking for other available avenues.
“All I know is, I’ve got invoices that haven’t been paid. And so, I’ve got to try to put things in place so that I can pay my vendors, pay my people and keep the company moving forward,” Bullock said.
There are as many as 2,900 Oklahoma applicants and over 150 banks waiting for the program’s coffers to be replenished, according to the Oklahoma Bankers Association.
The US Senate approved late Tuesday a $484 billion package containing billions for small business loans, virus testing, disaster recovery loans and funding to prop up the SBA which has been overwhelmed by the loan applications.
The relief package includes $310 billion for paycheck protection loans. Of that about $60 billion is set aside for smaller lenders, such as community banks and credit unions. It now moves to the House for a vote on Thursday.
But there was no indication of how soon business owners like Bullock could obtain the loans they need.
‘We can only do what Washington tells us to do’
Amid the conversations and conference calls about additional funding, a group of Senators, including Sen. Jim Inhofe (R-OK) and Sen. James Lankford (R-OK), have called for the small business administration to continue accepting and reviewing applications while money is not on the table.
“Opening the E-Trans system would be a sensible step towards alleviating the inevitable rush of applications and additional strain on the process,” the Senators wrote about keeping the loan portal accessible. “Any delays in future approvals will be devastating as thousands of businesses are in dire need of immediate financial assistance. It is imperative that our small businesses have access to these funds at the earliest opportunity.”
The Senators expect the high influx of applications were felt by banks in the initial round of funding, as they rolled through lending the program’s first $350 billion.
“A lot of banks were surprised at the sheer volume of applications they received. The overwhelming part was when the bank couldn’t get into the system to get the applications approved,” said Adrian Beverage, executive vice president of the Oklahoma Bankers Association.
“We’re down here doing it at midnight, because the system seemed to work better in the middle of the night than it did during the day,” said Kirk Pittman, president of the Seiling State Bank, on entering in loan applications to the small business administration’s loan portal. “So that’s the best time to try to get in there and put these requests in.”
Banks across the country experienced delays as the protection program was rolled out. Hold ups were mostly caused by questions from banks that received no answer, an excess of applications being entered into the system and a lack of guidance.
“We can only do what Washington tells us to do, and guidance was slow to come out. And sometimes it provided more questions than answers,” Beverage said.
After collecting loan applications when the program first rolled out, the bank in Seiling waited to begin distributing paycheck protection loans until April 13, ten days after applications started coming in. The delay was to make sure the rules for the loans were understood and to minimize misinformation for customers, the bank said..
“We held up until Monday of this past week, we’ve had people approved ahead of that time, but we didn’t disperse any money until we felt comfortable that we had the right rules and we were interpreting correctly,” Pittman said.
For Lloyd Banks, owner of The Dive, a popular sports bar in Denton, Texas, said he is expecting a to receive a loan that will help him keep his entire staff.
“Possibly in the next few days everybody can come back to work, and we may not have a ton to do, and they may not like it, but I’ll have a list of fun chores we can do around The Dive for a while,” Banks said.
The food industry has been one of the hardest hit by the coronavirus as a large staff is not necessary for handling take out orders and there is not much work to be done from home. In the first round of loan applications, 160,000 businesses in accommodation and food services applied, totaling $30 billion in approved loans.
Despite the financial dire straits and pressure from others to reopen sooner rather than later, Banks is comfortable leaving his doors closed to the crowd.
“I am not ready to be open. I want to make sure this thing passes, because my bigger fear is we open too soon and it starts happening again with more cases,” said Banks. “I would rather be patient for a couple more weeks and let this pass.”