SALT LAKE CITY — Thanks to changes that were still being made late into Thursday evening by federal authorities, hundreds of Utah businesses in need of financial help to survive the ongoing fallout from COVID-19 are now being asked to wait a little longer as local lenders try to catch up with an evolving process.
Nearly $350 billion of a $2.2 trillion federal stimulus package passed by Congress and signed into law by President Donald Trump last week is earmarked for loans and grants aimed at keeping U.S. small businesses afloat in an economy that’s been devastated by the coronavirus pandemic.
The Paycheck Protection Program provides federally guaranteed loans to eligible small businesses in amounts up to $10 million and may be partially forgivable. The available financing can provide businesses that employ 500 or fewer with funds equal to 2.5 times the company’s average monthly payroll expenses. These loans are intended to help small businesses retain employees throughout and after the COVID-19 crisis with fund dispersal happening on a first come/first served basis.
But an application process that was scheduled to launch Friday morning was marred by a scramble by the U.S. Treasury Department and U.S. Small Business Administration to lock down details of the process and share updated information with lending institutions. While the emergency funds are backed by the SBA, loan processing tasks fall into the laps of local lenders across the country, some of whom have not previously worked with federal programs before.
Zions Bank reported Friday morning it was working to have its process up and running by the afternoon, but other reports indicate some major lenders would not be ready until Monday. As of late Friday afternoon, the Zions application page was still not available.
Traeger Grills CEO Jeremy Andrus has been heading up an economic task force for Utah tech advocacy group Silicon Slopes that has been working over the past week to help local businesses prepare to apply for the SBA loans.
Andrus said he was on phone calls late Thursday night with bank representatives who were still waiting for final decisions from federal agencies so the institutions could finalize their processing duties.
“It was literally late last night that the Treasury and SBA were able to provide final guidance on the application,” Andrus said Friday. “There’s been an application form out there but it was still being edited last night.
“My guess is many banks will not be able to begin taking applications until Friday afternoon or early next week.”
While it was not clear how many banks had been able to activate their processing of Paycheck Protection loans by the end of business Friday, Treasury Secretary Steve Mnuchin was tweeting about the successes of the program Friday afternoon. “Update over $1.8 billion in #PPPloan now processed by @SBAgov mostly all from community banks. Big banks taking in large amounts, but not yet submitted in these numbers!”.
Andrus said Silicon Slopes is keeping its business information portal updated regularly and was working to add a list of Utah banks that were actively processing SBA loans through the Paycheck Protection Program. The site also contains information that will help Utah business owners complete their applications and offers further details on other state and federal programs that are making money available.
The Utah Bankers Association has also posted a list of Utah banks participating in the Paycheck Protection Program as has Utah’s Credit Unions, listing Utah credit unions that can originate the SBA-backed loans for small business owners.
Utah business owner Scott Crabill said he had already completed his application for Paycheck Protection funding but heard from several banks he contacted Friday that they were still working out their part of the processing.
“I got my application filled out and that part was fairly easy,” Crabill said. “But now it’s just floating out there. ... I’m waiting to hear back on when the bank can actually accept the application. Not sure if they can just take the PDF I filled out or if I’ll have to transfer the information into another form.”
Crabill said he’d heard from several banks, including Wells Fargo, that they may not be able to begin taking applications for the Paycheck Protection funding until Monday.
Crabill, who operates Go-Ride bicycle sales and repair stores in Sugar House and Draper, said his business, like so many others, is suffering under the COVID-19 restrictions at a critical time for those in the cycling business. Crabill said getting some financial help through the SBA funding will be critical to keeping his business afloat and noted he is down to half his usual staff and is having to limit customers in his stores and relying heavily on the repair side of his business as sales of new bicycles has slowed to a crawl.
“It’s a scary time,” Crabill said. “As a bike shop, you typically lose money all winter waiting for March, April and May which are our most crucial months. I’m sitting on a year’s worth of inventory ... that is moving very slowly and making it hard to pay rent, pay utilities and keep our staff working.”
Utah Bankers Association President Howard Headlee said in spite of the bumpy start for the Paycheck Protection Program loan program, he believes Utah lenders are getting caught up with the changes made by federal officials — some of which were not complete until 10 p.m. on Thursday — and the state is well positioned to maximize federal help for its small businesses.
However, Headlee said it also appeared even as banks were starting to process applications, the federal side of the process was moving very slowly on Friday.
“Our Utah lenders were well prepared for this, but like every bank in the country right now, they’re all needing to make adjustments to changes made last night,” Headlee said. “Utah is the fifth largest banking state in the country and we have some of the best capitalized banks in the nation. That should bode very, very well for Utah and Utah businesses in this crisis and specific to this program.
“Our goal is to make sure Utah businesses get a disproportionately large amount of this stimulus money and we think we’re in a really good position to make that happen.”
New data from the U.S. Chamber of Commerce reflects just how important this SBA funding is for struggling small businesses in Utah and across the nation.
According to a report released Friday by the national group, about 1 in 4 U.S. small businesses say they “are two months or less from closing permanently amid the economic downturn caused by the coronavirus pandemic” and more than 1 in 10 “are less than one month away from permanently going out of business.” And, 43% say are three to six months away from permanently shutting down.
When the U.S. Chamber asked business owners what proposals might offer the most relief, they indicated support for three key provisions included in the recently enacted $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act:
- 56% of small business say direct cash payments to Americans would be the most helpful form of aid from the government.
- Loans and financial aid (30%).
- Suspending payroll taxes (21%).
U.S. Chamber of Commerce chief policy officer Neil Bradley said businesses are in desperate need of help and require federal leadership to establish clear guidelines for local financial institutions that will supply the connection to relief funding.
“As the poll results show, small business owners are looking for loans and financial aid to ensure they do not have to shut their doors or go bankrupt because of the coronavirus,” Bradley said in a statement. “American banks are ready to help, but they need clear guidelines from the administration.
“American banks will be on the front lines to help businesses survive during this pandemic.”
During a Silicon Slopes town hall webcast Friday afternoon, Andrus discussed some results from a survey of Utah businesses conducted this week by the group that reflects similar data.
Andrus said 60% of survey respondents said their businesses could not go longer than three more months without some type of financial assistance and 12% said they had already ceased operations, at least temporarily.
Andrus also said Utah businesses were reporting average revenue declines thus far in the second quarter of about 50% and most survey participants don’t expect to see any movement toward recovery until at least the end of 2020 or early 2021 at this point in the pandemic.
Correction: An earlier version incorrectly cited the maximum loan a small business could qualify for is computed by multiplying average monthly expenses by a factor of 2.5. That amount is capped at a company’s average monthly payroll costs, multiplied by 2.5.