Washington Central Banks Work To Get Small Business Paycheck Protection Program Loans | Coronavirus
The smallest loan Wheatland Bank processed for the federal statewide paycheck protection program was $ 1,155.
For CEO Susan Horton, this shows that local businesses in central and eastern Washington affected by COVID-19 will receive help.
Customers write to the bank, calling PPP a “game changer,” Horton said.
The central feature of the program is that loans are 100% repayable if specific criteria are met – for example, if at least 75% of the loan is used for payroll.
The Wheatland Bank and financial institutions across the country were able to resume processing P3 applications on Monday after Congress passed legislation that injected an additional $ 310 billion into the program last week.
The Small Business Administration had to temporarily suspend the program after receiving an allocation of $ 359 million in just under two weeks.
The new funding is not expected to last much longer than the initial allocation, given the volume of applications processed by banks the first time around.
As a result, most banks have chosen to focus on processing existing requests and stop accepting new ones.
But Wheatland Bank, which has a branch in Yakima, has chosen to continue accepting applications.
“We are thrilled to be able to help our small business clients and our communities,” she said. “As long as the funding is there, we will participate. “
When the Small Business Administration rolled out the paycheck protection program just over three weeks ago, it didn’t go well, community bank officials said.
Banks encountered technical issues while trying to process claims on the SBA’s online portal. They also received constantly changing information on how to proceed.
“The rules were pretty complicated,” said Jim Wilson, spokesperson for Baker Boyer Bank, a Walla Walla-based community bank with operations throughout south-central Washington, including Yakima and the Tri-Cities. “The tips were updated almost daily. “
For several days, the bank was able to put together an application package, which highlighted the need for companies to work with an accountant to meet the extended application requirements.
This meant companies without an accountant were at a disadvantage, Wilson said. “This is the place where people got stuck,” he said.
Several large publicly traded companies have received loans worth tens of millions. But one small company that managed to secure a loan in the first round of application was Howard’s Medical Supply, with sites in Yakima, Sunnyside, Selah and Ellensburg.
CEO Erik Mickelson had to submit a separate application for each of Howard’s three business entities.
One application – for the Yakima and Sunnyside sites – has been approved. The other two requests are still being processed.
Mickelson attributes a long-standing relationship with Banner Bank and his accountant to the smooth running of the process, which included regular updates from the bank.
Although he did not disclose the terms of the approved loan, he said receiving it means that he will not have to reduce employee hours.
Although business is critical and sales of some items like oxygen are up sharply, overall sales are down by around 30%.
When employees are not serving customers, they have been able to work on several side projects. Employee retention is crucial, Mickelson said.
“Everything is going to be busy again,” he said.
It remains to be seen how long the current allocation of funds will last, but in general it appears that banks have been able to push through more applications for small businesses.
This round of funding includes an allocation of $ 30 million for loans processed by community banks that work with small local businesses.
According to figures from the SBA as of Tuesday morning, nearly 70% of the 475,000 loans processed were from small lenders with assets of less than $ 10 billion. That number jumps to 87% when you include both small and medium lenders, those with assets of less than $ 50 billion.
The SBA also set aside several hours on Wednesday just to process applications from banks with assets of less than $ 1 billion, further assuring that local businesses would be able to secure PPP loans.
The Wheatland Bank, with assets of $ 500 million, is one of the smaller banks. As of Tuesday afternoon, about 550 of the more than 600 requests processed by the bank had been approved. The amounts ranged from the previously mentioned $ 1,155 to $ 3.2 million. The average loan is $ 120,000 and about 41% of beneficiaries were agricultural businesses.
“It’s very representative of eastern Washington,” said Horton, CEO of Wheatland Bank.
Baker Boyer Bank expects more than 300 loans to be approved from all of its locations, including Yakima, Wilson said. The average amount should be around $ 175,000. About 40 of these loans are expected to come from businesses in Yakima County.
On average, Wilson said, businesses in Yakima County – which include construction companies, lawyers, dental offices and restaurants – will receive an average of $ 250,000.
Wells Fargo, which has offices in downtown Washington, said that of the more than 100,000 claims nationwide processed for review by the SBA on Monday, 90% were from companies with fewer than 25 employees. The average loan amount was $ 110,000.
Banks offer business clients other options if they are unsuccessful in securing a PPP loan.
Horton said Wheatland Bank has allowed commercial borrowers to defer loan and credit card payments for up to six months without fees or penalties. There is also an option to make interest only payments.
The bank is also working with homeowners affected by the moratorium on commercial and residential rent payments, Horton said.
“I think most businesses should understand that if they have a good bank, they will get the help they need right now,” she said.
Meanwhile, Baker Boyer Bank is working on new loan programs for businesses affected by the COVID-19 pandemic, Wilson said. He plans to roll out the new offers in the coming weeks.
The loans will not be 100% repayable, like those of the PPP, but they will be offered on favorable terms.
“We are able to create conditions and programs to help small businesses (earn) cash,” Wilson said. “That’s where the challenge lies right now. “
Editor’s Note: The Seattle Times, parent company of the Yakima Herald-Republic, is a recipient of PPP funding. Yakima Herald-Republic’s editorial decisions are separate and independent of funding.