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
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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