Life on the front lines of the federal government’s small business loan program
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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
Which businesses are allowed to reopen right now? And which businesses are actually doing so?
As a patchwork of states start to reopen, businesses that fall into a gray area are wondering when they can reopen. In many places, salons are still shuttered. Bars are mostly closed, too, although restaurants may be allowed to ramp up, depending on the state. “It’s kind of all over the place,” said Elizabeth Milito of the National Federation of Independent Business.
Will you be able to go on vacation this summer?
There’s no chance that this summer will be a normal season for vacations either in the U.S. or internationally. But that doesn’t mean a trip will be impossible. People will just have to be smart about it. That could mean vacations closer to home, especially with gas prices so low. Air travel will be possible this summer, even if it is a very different experience than usual.
When does the expanded COVID-19 unemployment insurance run out?
The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.
You can find answers to more questions here.
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