Stimulus loan program gets off to rocky start, is important lifeline nonetheless
Lenders work to connect customers with Paycheck Protection ProgramApril 7th, 2020
When the year began, business was booming, and the biggest challenge for many employers was finding qualified job applicants.
Suddenly, we’re in an economic environment no one anticipated. People across our community have been personally impacted in ways they could not imagine: Businesses closed, employees laid off or furloughed, small business owners stranded. They are our neighbors, friends, and family.
Many employers are hoping for relief through the $349 billion Paycheck Protection Program (PPP) that is part of the massive stimulus package approved by Congress. PPP loans, available primarily to businesses and nonprofits with fewer than 500 employees, will be forgiven for those that meet requirements that include retaining most employees.
The PPP is a first-come, first-served program for those who qualify, so businesses are understandably anxious to get their applications processed. Lenders throughout the Inland Northwest received thousands of calls from frantic business clients in the days leading up the program’s launch on Friday, April 4
The system was not set up to inject liquidity into the economy so quickly. Unfortunately, the U.S. Department of Treasury published the interim final rules less than 24 hours before it made the loan forms available for applicants. Without those rules, most lenders didn’t have processes in place to start reviewing the applications and making the government-backed loans. Sen. Marco Rubio said Saturday that only about one-third of lenders were ready.
Another bottleneck: After lenders complete an applicant’s paperwork, it must be submitted for approval via a single digital platform. That system bogged down on Monday, slowing the pace of approvals.
Despite those challenges, the Small Business Administration processed an astonishing number applications, reported Larry Kudlow, director of the National Economic Council. By 9:30 a.m. Monday, Kudlow said, the agency had approved 130,000 loans for $38 billion – nearly 10 percent of the available funding.
No one can guess with confidence where the American economy is heading, because we’re in territory that no one has ever seen. There’s no predicting the depth of the damage or the speed of the recovery. Congress and the President have responded with an aggressive stimulus package that we all hope will lessen the impact on communities, businesses, and families.
As leaders of two of Spokane’s biggest business lenders, we’re optimistic that the Small Business Administration will work out any flaws in the PPP process. We encourage Rep. Cathy McMorris Rogers and her congressional colleagues to boost funding for this jobs-preserving program, and thank them for their commitment to date.
If your business is struggling, applying for a PPP loan is only one potential step. We encourage you to contact your bank, credit union, or other financial partners as soon as possible, to work together on additional solutions. These financial partners are here to help you in this difficult time. There are many programs available for individuals, companies, and their employees, so work with your CPA to see which are best for you.
We are committed to funding these stimulus programs in our community, knowing that the sooner we’re back on firm footing, the sooner we can get back to the important work of supporting our community’s long-term priorities.
Jack Heath is the president and chief operating officer of Washington Trust Bank. Ezra Eckhardt is the president and CEO of STCU.