For many, there’s still no federal relief in sight
Small-business owners await cash to keep afloat but instead face hurdles and denials
SAN ANTONIO — JR Vega, an owner of the Winchester pub in Alamo Heights, went on Facebook to vent about how his small business hasn’t received any federal aid in response to the coronavirus pandemic.
“How many small business owners were screwed by the emergency federal disaster loan and the ppp (Paycheck Protection Program) loan, we received 0, lol, freaking unreal …,” he huffed, adding that “we are going from great to gone.”
Vega chalked up the post to his frustration. Before it closed to diners, he said, the Winchester had its two best months since its November 2017 opening.
The Winchester furloughed its staff of about 18, but Vega had hoped to bring them back with a $75,000 PPP loan through JPMorgan Chase.
He learned from Chase on Friday, a day after the $349 billion PPP pot was depleted, that the Winchester’s loan application “was still on hold.” The business also applied for an Economic Injury Disaster Loan from the
Small Business Administration but has gotten no response, he said. A new, $483 billion bill has been passed by the Senate and is expected to be taken up by the House on Thursday. It includes $321 billion to replenish PPP funding.
The Winchester isn’t alone in failing to obtain federal help. A survey of small-business owners by the National Federation of Independent Business found that that 80 percent of respondents were still waiting for financial assistance. Many of them did not know where they stood in the application process.
Almost 1.7 million loans were
approved by the SBA, including about 135,000 in Texas. At least 6 million businesses nationwide were likely eligible, according to Census data.
The PPP loan program has provided loans to small businesses to pay their employees during the COVID-19 crisis. The loan proceeds also can be used to cover other costs, including mortgage interest, rent and utility costs over an eight-week period after the loan is made.
Small businesses were advised to apply through their bank, yet many don’t have banking relationships. And many banks would only accept applications from existing customers.
The speed at which the $349 billion was depleted sparked criticism that bigger companies benefited
the most. Three restaurant chains — Shake Shack, Ruth’s Hospitality Group and Potbelly’s — obtained a total of $40 million in loans. Shake Shack later said it would return the $10 million loan it received.
The program was generally limited to businesses with fewer than 500 employees.
Already, some small businesses shut out from getting a loan have filed federal lawsuits against big banks.
Rather than accept applications on a first-come, first-served basis, one of the suits alleged, Bank of America prioritized those applications with higher loan amounts because processing those applications resulted in higher fees for the bank.
“Bank of America enriched itself
at the expense of American taxpayers, undercut the intent of Congress and the Senate, undercut the dollar-per-dollar effectiveness of the CARES Act itself,” the suit says. The bank “caused irreparable harm to countless small businesses and workers who actually needed the temporary funding of the PPP loans to make payroll, retain their employees, stay afloat.”
Bank of America spokeswoman William Halldin said it disagrees with the allegations in the lawsuit. It received 370,000 applications, representing about $50 billion. It’s continuing to accept applications in anticipation of additional funding.
Some 10,640 businesses received a total of $3 billion in loans through Frost Bank, for an average loan of almost $282,000. Roughly 3,360 loans applications didn’t get SBA approval. Those businesses had applied through Frost for about $340 million in loans, or an average of $101,200 each.
Frost Bank spokesman Bill Day said there was no favoring “big over small.” Three-quarters of the loans went to companies with 25 or fewer employees.
But Day added, “I think you could fairly say that a bigger company with access to CPAs and lawyers (who have) experience with government applications would probably have an advantage over a smaller company that was doing this kind of thing for the first time.”