Life on the front lines of the federal government’s small business loan program
Share Now on:
Community banks participating in the federal government’s Paycheck Protection Program for small businesses have faced unprecedented challenges in the past few weeks.
Laurie Stewart, president and CEO of Sound Community Bank in Seattle told “Marketplace” host Kai Ryssdal that her bank received five times the amount of demand for the federal government’s small business loan program than they had anticipated.
“We did not have a good grasp of how many small businesses would just be starving, literally starving for this funding,” she said.
The Small Business Administration processed 1.6 million loans in the first two weeks of the program. According to a press release, nearly 20% of them were processed by financial institutions like Sound Community Bank with less than $1 billion in assets.
“We made 300 loans in two weeks,” Stewart said. “For a bank our size, you know, we could go six months and make 300 loans. So it was just a huge step up in throughput,” she said.
That meant long hours for Sound Community Bank’s employees, many of whom are working from home.
“One of our bankers sent me an email message at 11:30 at night during that first round of approvals and said, ‘I got to 20 million. I’m going to go to bed so I can get up and do it all over again,’” Stewart said.
But last week, when the $349 billion originally allocated to the Paycheck Protection Program ran dry, Sound Community bank still had 293 would-be borrowers in the pipeline.
“That’s what breaks my heart,” Stewart said. “Almost exactly the number we made were the number that we had to say — and this is the hardest part of my job I think I’ve ever had in my entire career — was ‘I’m really sorry, the money’s gone.’”
Despite that, Stewart said she’s hopeful that Sound Community Bank will be able to start making Paycheck Protection Program loans again soon.
“I’m still thinking positively that there will be additional funding,” she said. Congressional leaders said Monday that they’re nearing a deal on another economic rescue package that would provide additional funding for the program.
COVID-19 Economy FAQs
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.