Just three weeks after its initial launch, the Small Business Administration’s Paycheck Protection Program has been depleted of funds.
The PPP was designed for businesses to be able to still pay their employees while covering other costs while being shut down by the coronavirus pandemic.
The $349 billion in funds ran out on Thursday, April 16. Banks that had been helping businesses apply for the program were notified that the SBA would no longer be accepting applications and those waiting in the queue would not be approved, said Steve Heine, president of Woodsboro Bank.
“We had about a dozen applications literally in the SBA queue when the money ran out,” Heine said. “And we still have a couple dozen people who have indicated interest in the program.”
The Maryland Bankers Association surveyed 21 community banks in Maryland and released data stating 4,883 loan applications were pending or in process when the PPP funding was exhausted on April 16. Those applications represent $664,854,426 in relief, and puts 17,389 Maryland jobs at stake.
“Without further Congressional funding, thousands of Maryland businesses and their employees are at risk of not being able to benefit from the much needed payroll relief,” said Kathleen Murphy, president and chief executive officer of the MBA. “The banking industry stands by small businesses across Maryland; banks are anxiously waiting to upload thousands of pending applications once new funding is signed into law.”
Heine has been contacting congressmen, senators and trade groups such as the Independent Community Bankers of America to help get the fourth stimulus package, which includes refunding the PPP, passed.
Treasury Secretary Steven Mnuchin said on CNN over the weekend he thought a deal on a new $2 trillion stimulus package, which includes an extra $300 billion for the Paycheck Protection Program, could be passed by Congress early this week.
Woodsboro Bank was not an SBA preferred lender at the beginning of the month. But once they realized that they would need to become one in order to help local businesses apply for the PPP, they went through the steps necessary, which Heine said required a lot of time and work.
The SBA was providing new information daily, and the bank had to build a system with the help of the SBA office in Baltimore. All within three weeks, Woodsboro Bank created the system, got it up and running, helped businesses apply, and then had to begin turning businesses away, or tell them that their application was left pending.
Woodsboro Bank, along with other community banks like Frederick County Bank, worked with the applicants to gather their information and then filed their applications for them. Meanwhile, Heine said, larger banks were using online portals for filing, which caused some confusion among businesses who may have never actually gotten their application through.
“I talked to one business owner yesterday who had submitted their application to a national bank on the fourth of April and as of yesterday [April 16] they have not received a response from the bank on whether they have been approved,” Heine said.
Woodsboro Bank helped businesses that ranged in size, from sole proprietors to businesses with 350 employees. Heine said that the bank is also deferring loan payments for three months for all of its clients.
“I think every bank large and small is truly focused on helping their clients, and in the case of Woodsboro Bank ... we’re not just trying to help our clients, we’re working hard to protect our communities,” Heine said. “Because by helping our clients we’re making sure that the people who work there still have jobs.”