(Photo | Cascade Business News)
Local Business Owners & Banks/Credit Unions Weigh-in
When President Donald Trump signed into law the CARES Act on Friday, March 27, American workers and small-business owners breathed a collective sigh of relief knowing that $376 billion in relief funds would become available to them. What they did not likely know at that point, however, is that the application process would be fast and furious, and successfully getting funding relied heavily upon which bank you worked with, and how quickly your application was submitted. Many were left without receiving funding, and as a result, Congress released more funding into the pipeline on April 24.
Throughout all of this, what has quickly become apparent is that the economic crisis caused by the COVID-19 outbreak mimics and shadows its medical counterpart: It is fluid and changes by the day, with no concrete end in sight. Although the governors of each state have been tasked with “reopening” their states as they see fit, the longer-term economic effect of this is still a complete unknown.
To learn more about how the disaster loan application process has been going, we at Cascade Business News reached out to several small-business owners, as well as banks and credit unions, to inquire about their experiences in applying for and distributing the loans. What we found is that the process — like the virus — is different with each case.
As of March 27, the CARES Act established several new temporary programs to address the COVID-19 outbreak. The first and biggest is the Paycheck Protection Program (PPP), which, as described on the Small Business Administration (SBA) website, helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. The loans are fully forgivable if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.
A second loan, the Economic Injury Disaster Loan Emergency Advance (EIDL), provides up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties. While there are other programs, these are the two primary loans available through the SBA and distributed through approved lending institutions to help small businesses survive this pandemic.
Although lenders were able to begin processing loan applications as soon as April 3, and the Paycheck Protection Program was set up to be available through June 30, initial funding ran out very quickly. By April 13, the SBA reported having guaranteed 1,035,086 loans under the Paycheck Protection Program, and by April 16, banks were announcing that funding was gone, and that no more applications would be accepted.
“On March 30, I applied for the Economic Injury Disaster Loan Advance. It was sent to me from other friends in business and from the Downtown Bend Business Association,” said Rebecca Charlton, owner of Cowgirl Cash western vintage boutique in downtown Bend. “The application said, ‘This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties that does not have to be repaid.’ The application was clear, and user friendly. It asked for my gross sales in the last 12 months, and my cost of goods sold. At the end, it asked for my bank account and routing number. I pushed submit and was given a receipt in clear large font that read: ‘Application submitted. Your application is: 3600082041.’ Three days later, on April 3, I received an SBA email that looked like a newsletter. I actually deleted it, because I figured I had already applied. However, I dug it up after my business partner alerted me, and down at the bottom of page two it said, ‘Please note the application process for the EIDL program was updated March 30. Those who submitted a COVID-19 EIDL application prior to March 30 should reapply using the streamlined application.’ My application was filed March 30 at 1:30pm and was very streamlined, so I just sat tight.”
On April 13, Charlton said she received another update that said, in short, that she would be given an advance of $1,000 per employee as of January 31, 2020. “Well shoot. I don’t have any employees in January. That’s a really slow time, so my employee went to the desert for sun and I ran the shop with my partner, no problem. Even if I did get $1,000, is that supposed to cover my downtown rent? My income? My lost sales?”
As of early April 20, Charlton said she hadn’t heard back from the SBA, and had given up the hope of receiving assistance. “I’m proud and happy that we have flattened the (COVID) curve in Central Oregon; under 100 cases, and no deaths. My goal early on was to get out of this without knowing anyone who died. It never crossed my mind that the one death might be that of my own little business. Over the last ten years, it has survived groups of homeless youth, massive snowstorms with treacherous ice and snow, smokey days that killed prime summer business and summer festivals that take the parking and suck the people into temporary booths.”
Later on April 20, Charlton said $1,000 landed in her business checking account. Although she is grateful, she said her “windfall” is a drop in the bucket. “This is one-third of one month’s rent. But I’m not going to apply again. I guess I’ll just say, ‘Thank you.’ My small business can make it until we are allowed to re-open, but what then? Will the tourists with money in their pockets flock to find me and buy enough to build up my coffers as usual so I can make it to Memorial Day, 2021?”
Tower Theatre Foundation
Small-business owners who applied for PPP loans through their banking institutions seemed to fair better with the process, depending upon which bank they used.
The Tower Theatre Foundation, a nonprofit with seven employees, applied for the PPP loan through First Interstate Bank, and received funding quickly and efficiently according to Executive Director Ray Solley. “The process went surprisingly well. Our director of finance jumped on it,” he said. The Tower Theatre Foundation received information about the loan program from the League of Historical American Theatres, a nonprofit membership association of historical theaters, and then quickly pursued the PPP loan. “The only glitch was when a new form was sent out by the SBA, and we had to re-do the application at the last minute. First Interstate Bank is a long-time supporter of the Tower, and they were wonderful. They were all over it. We got an email from FIB at 8:30am on a Saturday; they were cranking.” The following Thursday, Solley said the money was wired into the foundation’s bank account, and the employees who were on temporary furlough all resumed working.
“This is a shining example of how a community bank should operate and serve the community,” he said. “They really stepped up and did not hesitate to make it work. We were very thankful they were as prepared and active in this as they were. We were surprised at how quickly we got the money.” Solley said that in two months when the funding will be used up, the foundation will re-examine the situation, and determine next steps. “The eight-week clock started ticking as of mid-April. In mid-June, we will look at how the world has changed, what we can and can’t do and what the Governor says. We have a recovery plan we have been creating.”
Alliance Supply Company
Solley was not the only one to praise the efforts of First Interstate Bank: Jeanie Dumont, president of Alliance Supply Company in Bend, said that she also applied for the PPP loan through FIB. “We were able to submit our application on April 3, and received our approval notice just one week later on April 10,” she said. “We received our funds on Tuesday, April 14. Dawn Cofer, VP and manager of the Revere Branch, always takes good care of us, but this time she went above and beyond, working late nights and Saturday to make sure everything was taken care of quickly. We have our employees back to regular hours.”
Cascade Graphics, a Bend business of 41 years, was issued an Essential Vendor certificate from Homeland Security for the products they produce for one of the world’s largest food equipment processing companies in the U.S. But their disaster loan application process didn’t go so smoothly, and as of April 24, they were still awaiting funding. “Wells Fargo is our company bank. Our corporate officers also have their personal accounts with the different Wells Fargo financial groups,” explained Billy Sherritt, GM and principal of Cascade Graphics. “We had our PPP application with Wells Fargo two weeks prior to the government actually releasing money to the SBA-approved banks. We were told by our representative at Wells Fargo that we were at the front of the line and not to worry. Within two days of the government releasing the PPP funds, all of the local lenders, including Wells Fargo, were committed well past their lending capacity and shut off PPP lending.” He continued, “Wells Fargo had been penalized and not given as much money as some banks because of their illegal activities a few years back. Our representative here in Bend failed to share that they would be limited in their lending capacity. Two weeks into waiting for Wells Fargo to tell us where we were actually at, we began to reach out to other lenders here in town.”
This process also proved fruitless, Sherritt said, because many of the larger banks in town required that borrowers have an existing account with them in order to apply for the disaster loans. “All of the lenders I contacted at that time were no longer accepting any PPP applications.” A family member told him about a big brokerage house based in Texas representing 400 banks, and Sherritt said they wound up getting a bank in Texas to process their PPP application. “To date, we are being informed that our application is active and that we should hear something this week. Isn’t there a saying about ‘fool me once, fool me twice?’”
Fortunately, Sherritt said Cascade Graphics had quite a bit of existing work, so they have been able to stay busy and keep everyone on. “Sales are off 60 to 70 percent. Eventually, this will catch up with us. Without the PPP grant, we will be forced to reduce staff to meet gross revenues.” He added, “What a process! I hope it is easier for the second-round applicants. I feel so sorry for so many manufacturing firms that did not have a backlog of projects, or worse yet, were in the day-to-day grind of retail and just had to close their doors. That is simply a disaster for them. I have no idea how they will recover. When we come out of this, I am hoping Bend really supports its small businesses.”
Wells Fargo Bank
“We are committed to responsibly assisting as many small businesses as possible given the realities of both this unprecedented situation and the tremendous interest in the PPP,” said Damon Dishman, Small Business Segment leader of Wells Fargo Bank. “We are pleased Congress has approved additional funding for the Paycheck Protection Program. Wells Fargo is working as quickly as possible in compliance with the regulations and guidance provided by the U.S. Treasury and Small Business Administration to prepare applications from small business customers for submission to the SBA. We have mobilized thousands of employees and launched new technology to assist customers seeking access to the PPP. (update.wf.com/coronavirus/paycheckprotectionprogram).
“We are committed to supporting our small business customers in a variety of ways, including payment relief for up to 90 days, fee waivers, payment deferrals, increases to lines of credit for Business Card and Business Line customers for disaster relief and other expanded assistance for deposits, small business lending and SBA products,” Dishman said. “In the month of March alone, we extended nearly $80 billion in new and increased commitments and outstanding loans to customers including consumers, small businesses and companies in the US. In addition, starting in early March and continuing into April, we helped more than 1.3 million consumer and small-business customers by deferring and waiving fees. This included deferring more than 1 million payments and providing more than 900,000 fee waivers.”
SELCO Credit Union
Like Wells Fargo, most banks and credit unions have stepped up to help businesses and individuals get through this crisis in one way or another. SELCO is participating in the PPP, and has also set up a COVID-19 Financial Assistance Program for consumers that includes income disruption loans and skip-payment programs for members. “Given the high volume of applications and inquiries we received for the PPP program, SELCO partnered with a national finance company (Lendio) with a streamlined online lending platform to process, approve and fund the PPP loan requests,” said Joe Rygg, SELCO’s VP of commercial loans for central and eastern Oregon. “SELCO has also created a loan program to assist owners of multifamily rental properties who have experienced a disruption in cash flow. This program is great, as it offers a quick and streamlined approval process, minimal fees and low interest rates. We designed this multifamily program to help property owners with liquidity so they feel comfortable working with their tenants in time of need.”
Rygg said SELCO referred more than 700 requests for the PPP loans to its online partner, and that despite delays in receiving the program requirements from the SBA, issues with the SBA portal and the overwhelming demand for the loans, 432 of their online referrals were able to receive approval for PPP requests. “The average size of our referral PPP loans was $58,000, compared to the national average of $240,000,” he said. “We are hopeful that the second round of funding will enable those businesses we work with who weren’t able to get approved before the funding ran out in the first phase to access this crucial program.” SELCO is not limiting the number of loan applicants, Rygg said, because Lendio is able to quickly process a high volume of applications. “So far, they have processed more than 27,000 Paycheck Protection Program loans.”
In addition to assistance with PPP loans, Rygg said SELCO is working with impacted commercial borrowers on a variety of relief options, including payment reductions or deferrals. “SELCO continues to originate new loans during this challenging period,” he said. “For our consumer members, we have a financial assistance program that offers an income disruption loan with a 2 percent interest rate and no payments for the first six months, skip payment options for eligible loans and personalized home equity loan assistance. Our Commercial & Business Banking team is ready and eager to help small business owners during this unprecedented economic environment. (CBBsupport@selco.org or 541-744-7525)
Northwest Credit Union Association
Other credit unions around the state have also taken steps to help customers. In a press release issued by the Northwest Credit Union Association, a trade association representing more than 175 not-for-profit, cooperative credit unions in Idaho, Oregon and Washington and their 7.3 million consumer members, it was reported that Oregon credit unions and other financial institutions were able to help nearly 19,000 small businesses receive approval for $3.8 billion before the first round of funds were exhausted on April 16. “Every credit union in the state is leaning in to support two million Oregonians who are credit union members — consumers who live in communities large and small, rural and urban,” the release stated. It further reported that in Bend, Mid Oregon Credit Union helped secure more than $5 million in PPP loans, and OnPoint Community Credit Union, based in Portland, helped 100 businesses obtain nearly $9 million in SBA funding. “Meanwhile, credit unions continue to find financial solutions for Oregon families through such programs as options to skip consumer, auto and mortgage payments, low-to-no interest emergency loans and loan modifications to make monthly payments more affordable.”
Mid Oregon Credit Union
Mid Oregon Credit Union, the only financial institution headquartered in Central Oregon, reported that it had completed approval of 37 Paycheck Protection Program (PPP) loans during the week of April 20. In a press release issued on April 24, Mid Oregon stated that the total approved funding from SBA was $9,309,789, which protected 776 jobs locally, that the average number of employees per borrower was 21 and the average loan amount was $251,615. “Our Commercial Services team did a great job of working through the red tape to get this program funding secured for our business members,” said Kevin Cole, Executive VP/CFO. “The demand and volume of interest for this program was overwhelming, and it was a fast-and-furious week to accomplish this level of loan funding in such a short timeframe.” Following Congress’s approval of another $310 billion to be released into the disaster loan program, Mid Oregon (midoregon.com) reported it had received 90 new applications in anticipation of the system coming back online for more lending to small businesses.
If anything is clear in this time of quickly changing circumstances, it’s that nothing is simple at the moment, and banks and credit unions are having to work just as hard as small business owners to get through this challenging period. “The response and need have been overwhelming,” agreed Matt Dynice, SVP and Commercial Market director of Umpqua Bank. “We received roughly 6,500 applications in the first 24 hours. The number of applications at the outset was so large that we paused submissions and carefully managed intake so that we could process the applications already in our system. We knew early on it was a race against the clock to get as many applications approved as possible.”
He continued, “PPP has been a massive undertaking, and there was a week to get the program ready. While we didn’t have all the details from the government at the time of the launch, we felt it was imperative to move forward as best we could for the sake of small businesses, given the magnitude of what they’re facing. Thanks to a tremendous team effort, we were able to move nearly 7,000 applications, representing $1.45 billion in funding, through to approval before the initial $350 billion had all been committed. This includes around $600 million for Oregon businesses. Our top priority these past few weeks has been to help as many small businesses as possible survive this crisis and keep their workers employed. We worked around the clock to get our PPP process in place by the April 3 go-live date, and Umpqua was the first bank on the West Coast to do so. Given the massive undertaking, PPP has been our entire focus during this time.”
To further assist customers in getting through the pandemic, Dynice said that in March, Umpqua announced its pandemic relief program, which includes loan and line of credit deferrals for consumers and small-business customers impacted by the pandemic. “We’re also waiving all associated fees with the deferrals, as well as waiving all ATM fees during this time,” he said. “The bottom line is that we are absolutely committed to helping our customers get through this crisis and are willing to work on an individual basis to do so.” Now that the second round of funding has been released, Dynice said Umpqua is continuing to process existing applications.
Washington Federal Bank
Washington Federal Bank’s Gary Haines, regional president in Northern Oregon, agrees that speed is key when helping clients with the disaster loan process. “The response to the PPP program has been remarkable. We have received thousands of applications from local businesses who need help. From the top down, our bankers have been working around the clock to process applications and underwrite loans,” he said. “The need is unlike anything we’ve seen before. This whole process has been a bit like the ‘Wild West.’ When the program first launched, we were processing applications as the guidelines were being built, but that’s what needed to happen. Our communities need help now and we feel extremely fortunate to be a strong, well-capitalized regional bank with the capacity to help get these funds to local businesses.”
Since April 14, Washington Federal Bank has approved more than $480 million in loans, with more than $52 million of them in Oregon, and has another $195 million in the application process. “With additional funds approved by Congress, we are continuing to process applications as quickly as possible. Given the need for this type of relief across the nation, the challenge right now is around how quickly we can process and underwrite these loans. Since the program was first unveiled, our team has been working non-stop for our clients to ensure that we are helping as many businesses as we possibly can.”
In addition to the push to get PPP funds to small business, Haines said the bank is also helping consumers through its COVID-19 Homeowners Assistance Program, which allows customers to defer mortgage payments for up to three months at no cost. “Whether you’re a commercial business or a homeowner, if you need help or think you may need help, talk to your banker. We may be able to review and modify the terms of your current loan to help you, or your business, get back on your feet,” he said. “While there is nothing precedented about today’s environment and the impacts of coronavirus on communities across the globe, we will get through this together and our communities will prosper again. Washington Federal Bank has served our communities for more than 100 years. We modified home loans to see clients through the Great Depression and we did it again to help more than 3,000 families stay in their homes during the Great Recession. Today’s banking industry is well-capitalized, and we’re here to help, both now and through the recovery.”
The Second Round of Funding
With the second round of funding released April 24, an additional $310 billion has been added to the Paycheck Protection Program (PPP), and $60 billion has been added to the Economic Injury Disaster Loan (EIDL) program. Business owners who applied for the PPP through their bank but did not receive funding in the first round are encouraged to contact their bank about their application status. Many banks are prioritizing applicants who applied during the first round but did not receive funding. The process may be continued based upon the initial application, though this could vary by bank. Business owners who applied for the EIDL through the Small Business Administration but have not received funds do not need to reapply.
If help with the application process is needed, Central Oregon Community College’s Small Business Development Center is available to assist business owners with these programs at no cost (email@example.com or 541-383-7290 to schedule an appointment via phone or video conference).
Though the billions of dollars infused into the economy through the CARES act will help keep small businesses and individuals afloat for a couple of months, it’s impossible to predict what will transpire beyond that.
“The shuttering of an economy at this scale has never happened before. Likewise, the reopening of a shuttered economy of this scale has never happened before,” said Governor Kate Brown in a press release issued by her office. “While we have to be careful, we also cannot stand still. As we prepare in the months ahead to get Oregon back to work, we must remember the importance of doing so in a smart and deliberate fashion that keeps us moving forward instead of sending us backward.”