As concerns rise that a $349 billion federal forgivable loan program will soon run out of funding to disburse, some New Orleans-area business owners say they haven’t been able to submit applications yet.
The Paycheck Protection Program – part of a $2 trillion-plus stimulus package – includes eight weeks of forgivable cash flow through 100% federally guaranteed loans to cover payroll, salaries, rent, utilities and other debt obligations. Banks are in charge of processing applications with the U.S. Small Business Administration, approving loans and distributing money to customers.
The initial expectation was that a business owner could go to their lender, apply and get money in the same day. But some Capital One Bank customers who contacted CityBusiness Wednesday said they haven’t been able to apply for a loan since the application period opened on April 3. Others vented frustration on social media.
Capital One Bank, which has one of the largest market shares in Louisiana, said on its website Wednesday said that it is “working to finalize our digital application process for the (PPP) to ensure that it is fully functional and compliant.”
“We are currently testing the effectiveness of our submission process with a small number of existing business banking customers,” the website said. “We anticipate being able to accept applications online shortly.”
Bank officials could not be immediately reached for further comment.
Other New Orleans-area banks are processing applications and distributing funds after a rocky start. Metairie Bank president and CEO Ron Samford, who said the first week of the PPP was filled with changing SBA guidelines, lack of access to the agency’s system and hurried training for bank employees and applicants, said Wednesday that most of those kinks have been worked out.
He said Metairie Bank has obtained approval for over $30 million, with 200 applications supporting 3,500 local jobs, and began funding the loans last week. Through the end of Tuesday, Metairie Bank had funded $10 million in loans and has another 200 applications in line to be processed, he said.
“The next big step will be in two months when the loan ‘forgiveness’ process will begin,” he said. “The SBA is developing additional guidance for what documentation is required and the level of review needed to support that determination.”
Louisiana Bankers Association CEO Robert Taylor said he couldn’t comment on why a bank may be having problems with the application process, but he said that there have been “innumerable issues” with the SBA’s website.
“One bank may have issues, and another bank may not,” he said. “There’s no consistency.”
Another issue that surfaced this week is the potential of the PPP running out of funding soon. The National Federation of Independent Business said Wednesday that an additional $251 billion is needed to avoid the funds being exhausted this week.
Congressional lawmakers have been negotiating how much to add to it and other federal loan programs. And some have taken issue with how the SBA programs are being administered and the length of time it is taking businesses to receive loans.
The Wall Street Journal reported that the PPP is expected to run out of money today, according to a person familiar with the fund. The publication described the loan program as being “at the center of a standoff” at the federal level.
“I hope additional funding is approved quickly, without partisan politics holding it up,” Samford said.