SBA’s coronavirus payroll protection program struggles to roll out
So many businesses are rushing to get loans through a special Small Business Administration coronavirus relief program that some banks are struggling to keep up with.
“We have received thousands of applications,” said Dan Fitzpatrick, president of the Citizens Bank of Pennsylvania, which normally processes a few hundred SBA loans per month.
“I must commend the government for moving quickly with this program. It really helps, ”said Amol R. Kohli, president of restaurant development and management company Cherry Hill AARK Enterprises, who has applied for a loan and is awaiting news.
Kohli declined to describe the loan amount, but said he did not need the maximum loan of $ 10 million allowed under the PPP. He only needs enough to keep key staff on the payroll at 17 Friendly restaurants in Philadelphia, South Jersey, eastern Pennsylvania, and Florida through April and May through. which he can, he hopes, re-establish seated service.
It had to completely close three stores in the mall, but said most of its owners were willing to “work with us” until the PPP money came in to keep 14 restaurants open with small teams offering food. take out, typically less than 20% of normal sales.
The loan, under PPP rules, will be “forgivable” – covered by US taxpayers – if Kohli spends the money on workers’ compensation and occupancy costs.
The new program required a new fully electronic system to speed up lending. Citizens’ Fitzpatrick said major lenders and the SBA need to build systems online in just a week. “The two-page request is very straightforward,” Fitzpatrick said. “But they also ask for fairly large amounts of tax records. So we get requests with five electronic attachments. As you can imagine, keeping it organized is a big business. And we have to get it right.
Like other SBA lenders, Citizens accepts PPP requests only from current customers. If you don’t bring in an SBA lender who is pushing the new program, you are left behind. The plan is to add more candidates “after serving existing customers,” spokesman Frank said. Quaratiello.
ADP, Paychex and other automated payroll systems are extending their own software to make it easier for small employers to collect PPP records, Fitzpatrick said.
Like many banks, Wilmington-based WSFS Bank is currently targeting PPP applications for its current business customers. WSFS on Monday reported “a high volume of applications” from its customers mainly based in Pennsylvania and Delaware.
“We have a lot of interest from the small businesses we serve. They are our first priority, ”said Candice Caruso, director of government guaranteed loans at WSFS.
“We launched today and are actively seizing requests as we receive them,” Caruso said on Monday. “All of our clients are directed to our website and we have received loan confirmations.”
Not everyone is qualified.
Gus Drakopoulos is disappointed: the operator of the “gentleman’s club” V-Lounge near the Philadelphia International Airport, Drakopoulos was hoping for PPP money. But “the banks are taking the position that because we are in the adult nightclub business we are not eligible for this loan,” he said. (Banks take a similar stance against supporting marijuana-related businesses, one lender said.)
Drakopoulos said PPP lenders are relying on a 1990s SBA exclusion for “businesses of a lascivious sexual nature.”
These are “old rules” and should not apply to its 35 employees, who had hoped to expand into neighboring Sin City club this month. “Donald Trump said this was a relief program especially for the hospitality industry,” Drakopoulos said. “My employers are bartenders, waitresses, waiters, bar-backs, line cooks, busboys, managers, assistant managers.”
He does not intend to have the dancers compensated by the taxpayers: the artists of the club are “independent contractors”, he declared.
Wells Fargo began taking applications from other banks on April 3 – then announced on April 5 that it was shutting down its own online portal for Small Business Administration loans, claiming the giant bank had already passed its target of $ 10 billion in commitments.
Some banking websites go down due to high demand or are not yet functioning.
“I spent almost 12 hours on Saturday trying to complete our application with PNC,” Anne Buchanan, owner of Buchanan Public Relations told Byrn Mawr, who said she normally “likes” the bank.
“It was a disaster, mainly because the bank rushed to open its portal, throwing in something that was riddled with programming errors,” she said.
PNC’s customers took to social media such as Twitter and called that bank’s PPP application program a “garbage fire.” For much of the day, the portal didn’t allow Buchanan to download any of the documents required for an SBA loan.
“And worst of all, the application – which was quite long and complex – timed out after 15 minutes and didn’t save any work. I was almost done with the application “which involved downloading dozens of documents”, and it would freeze. Nothing could revive him. And then that would kick you off and start you all over again, ”Buchanan said.
“I get it. The banks were in an impossible situation, rushing to get something with minimal and conflicting advice from the SBA. But, boy, did this create a painful and stressful day for many? ‘between us. ”And PNC remained fairly callous until later in the day, when he began to recognize the issues with his platform.
She was finally able to complete the application on Saturday night, but has no idea if the delays will hamper her ability to raise funds.
PNC issued the following statement: “We opened our online application for the Paycheck Protection Program Friday night to PNC’s small business clients and had a tremendous response, with tens of thousands of claims submitted over the past year. weekend and this morning. We appreciate how patient our clients have been as we continue to work with them to complete their requests and adapt to guidelines set by the SBA. We will continue to work throughout the process to support our many business customers, their employees and our communities during this difficult time. “
A weekend investigation of the Small Business Network of Enterprises for Responsible Tax Reform found that most respondents tried to apply for a paycheck protection program loan on Friday, the day the program was launched. But most were unable to submit an application because lenders were awaiting further direction from the federal government and were unprepared.
About a fifth, or 21%, of the more than 500 respondents said they can only wait a week for loans to arrive before their business goes bankrupt. 75% said they could wait a month or less for their business to go bankrupt.
Grant Geiger, founder of EIR Healthcare in Center City, applied for a PPP loan with Wells Fargo on Friday. “We have a local banker, he was open to communication,” he said. “But he didn’t know what to do with our request. I don’t really blame Wells, they did their best.
EIR, which designs hospital facilities, has submitted an indication of interest for the loan of around $ 100,000 intended to cover the payroll, but no formal request yet. EIR’s revenue was on track to hit $ 6 million this year and it has seven employees in Philadelphia.
“They said they would get back to us in a few days,” Geiger said.