PARKERSBURG, W.Va. — The nation’s banks were still receiving guidance late Thursday evening on the $349 billion federal loan program aimed at helping small businesses stay afloat during the COVID-19 pandemic.

On Friday morning, the floodgates opened.

“We received some of the guidance Thursday night with how banks could actually use the program,” said J.T. Thurston, a spokesman for the Ohio Bankers League, a trade association representing more than 170 FDIC-insured financial institutions.

By the next day, many banks received waves of applications, but some were still trying to check regulatory boxes to be able to participate in the program, Thurston said.

To access the loan system set up by the U.S. Small Business Administration, banks must already be approved in the agency’s primary program for providing financial assistance to small businesses, he said. That applies only to about 1,800 of the 5,500 banks in the country, Thurston said.

“That’s causing some capacity issues with the system,” he said. “There are some banks out there that are already lending, and that number is increasing all the time.”

Created by Congress with the recently passed C.A.R.E.S. Act, the Payroll Protection Program provides loans mainly for businesses with 500 or fewer employees that were in operation in 2019 and up through Feb. 15 of this year, said Ashley Brown, vice president, regional manager, with Peoples Bank in Marietta, Ohio.

The maximum loan amount is two-and-one-half times the business’ monthly payroll, and the loans have no fees. At least 75 percent of the loan must be used for payroll, Brown said.

If businesses show the money went to retain or rehire employees and pay some overhead expenses through June 30, the loans will be fully or partially forgiven, the Associated Press reported earlier this month.

Thurston said all banks want to make the loans if they can, but some don’t have the capacity or the profile. In addition, the 1 percent interest rate being assessed on the loans is rather low for some institutions, he said.

Some banks may be hesitant to participate initially because “it’s been rolled out very quickly and banks are naturally conservative organizations,” Thurston said.

United Bank has seen “a huge demand” across its footprint, said Patrick Bryan, United market president in Wood County, W.Va. United has locations in West Virginia, Virginia, the District of Columbia, Maryland, Ohio, Pennsylvania, North Carolina, and South Carolina.

“Our bank has been pretty much all-hands-on-deck,” he said, noting employees worked Friday, Saturday and Sunday to process loans.

Some SBA loans in the Parkersburg, West Virginia area, where Bryan is based, have already been approved and are awaiting preparation of their final documents.

But there have been challenges at other banking institutions.

Serving customers in Indiana, Kentucky, Maryland, Ohio, Pennsylvania and West Virginia, WesBanco Bank said it received “an extraordinary number of SBA applications” since the program launched Friday.

“Until we work through the backlog and challenges with the SBA site, we will not be accepting additional requests,” the company’s website reads. “We apologize to our customers for their frustration related to this program, and we are working extensively to process all existing requests as quickly as possible.”

“There obviously is a lot to work through with it,” said John Iannone, WesBanco’s senior vice president of investor and public relations. “The program just rolled out Friday.”

Representatives of United and Peoples Bank — which has locations in Ohio, West Virginia and Kentucky — said they’ve experienced issues with the site, too. But Bryan said that’s not unexpected given that the SBA typically handles about $28 billion in small business loans in a single year.

“Implementing a $350 billion program in the middle of a crisis is a major undertaking,” he said. “We’re understanding of the size of this program.”

Some banks are reportedly limiting applicants to those with an existing relationship with the institution. Iannone said that for WesBanco, the program will initially be for its customers, but then, he added, “as we get through their applications, it’ll be open to anyone.”

United and Peoples said they will accept loan applications from any qualifying business. Existing Peoples customers “should work directly with their dedicated business banker to go through the process,” while new clients should contact the local branch manager, Brown said.

Evan Bevins can be reached at localnewsmatters@ogdennews.com.

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