Business

Small-business owners struggling with loan application process

Small-business owners are struggling to complete the loan application process for the Paycheck Protection Program.

Posted Updated

By
Mandy Mitchell
, WRAL reporter, & Rick Smith, WRAL TechWire editor
RALEIGH, N.C. — Small-business owners are struggling to complete the loan application process for the Paycheck Protection Program.

The $350 billion program, part of the massive federal stimulus package to help the battered U.S. economy weather the pandemic, provides loans to small businesses hit by the coronavirus outbreak to help them keep workers on the payroll.

"Lots of complaints of not being able to submit – either because their bank isn’t ready, other banks are only accepting current customers or mixed information being shared online," Lewis Sheats, assistant vice provost for entrepreneurship at North Carolina State University, said in an email.

Rich Baldyga, who owns Monster Tree Service in the Triangle, said he managed to get an application through to his bank, Wells Fargo, on Saturday just before the bank stopped taking applications.

"Now we are waiting again and not sure if there's anything we need to do," Baldyga said Monday. "I got on my website Wells Fargo account today just to see if there was an update or a message, but nothing yet."

Wells Fargo can't take any more applications because of a $10 billion loan cap. The Federal Reserve capped the bank's loans as a punishment for making phony accounts in 2018.

Charlotte-based Bank of America, by contrast, had processed 177,000 applications seeking a combined $32.6 billion as of Monday morning.

"We've been told that a number of small businesses have run into trouble with the small business loan process," said Rick Smith, WRAL TechWire Editor. "Now that's not surprising given how big it is and given how quickly it was launched."

Most large banks started the process on Friday, a week after President Donald Trump signed the $2.2 trillion stimulus package into law.

"What I was told is that the hangup is not on the small business administration side but on the banking side, where they have to dot all of the i's and cross the t's to make sure that all of the information is legitimate," Smith said.

Scot Wingo, a serial investor who now is chief executive of car maintenance startup Get Spiffy, said the company's car washes have been closed for more than a week.

"We could only get it submitted today," Wingo said of his loan application. "The bank is behind on the technology to handle this is our understanding."

"Flustered, rage, shock – all the above," said Tobi Walter, a member of the investment team at Cofounders Capital, a venture capital firm in Cary, to characterize the reactions the startups that filed for Paycheck Protection Program loans or disaster loans from the U.S. Small Business Administration.

Some Wells Fargo clients applied, kept "refreshing" when the bank made its web portal available, gave up, then found out later Wells Fargo had opened the portal briefly but the $10 billion it had available was already committed, Walter said.

The SBA also changed some of the criteria for the disaster loans and told applicants they had to apply again, he added.

All of the jumble just means more waiting for people like Baldyga.

"I's hard to kind of plan as a business owner," he said. "The unknown is a little bit frustrating."

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