A federal loan program ran dry, leaving Fort Worth small business waiting for money
A federal program designed to help small business employees maintain their paychecks during the coronavirus recession dried up Thursday and stopped taking new applications, leaving an untold number of Fort Worth-area businesses wondering when assistance will come.
The $350 billion Paycheck Protection Program was a major part of the $2 trillion economic stimulus package passed three weeks ago, but the funds ran out with the U.S. Small Business Administration posting on its website Thursday morning that it was “unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.”
A similar loan program for disaster relief has also dried up.
Small business owners with loans that haven’t been processed must wait for Congress to approve a Trump administration request for $250 billion more.
Many of those who already had money approved are still waiting for checks and countless others are wondering if they’ll be approved. It’s a double punch of anxiety, said Brian Happel, CEO of the Fort Worth market for BBVA Compass.
“This has probably been one of the most emotional things I’ve done over my 37 years as a banker,” he said. “Some of the people we’ve called ... they’ve literally cried on the phone, that’s how much this money has meant to them and their employees.”
Local bankers were not shocked that the loans dried up so quickly. The loan program launched April 3.
After the first few days of inputting applications from bank customers, Inwood National Bank estimated the program would be depleted by the middle of this week, said Martin Noto, consecutive vice president and chief lending officer.
“We could tell right away the dollars were going quickly,” he said.
The Dallas-Fort Worth office of the SBA did not have Metroplex-specific data about how many loans had been processed or were pending, director Herb Austin said. Texas-wide data from the SBA showed 88,434 loans had been processed by noon Tuesday totaling more than $21.7 billion. Nationally, the average size of the loan was $239,152 with about 70% being for $150,000 or less.
Inwood processed about 950 applications worth $220 million in DFW, Noto said. Many of those left waiting for help locally are likely sole proprietors and independent contractors who were not able to apply as early as other small businesses.
BBVA Compass processed more than $60 million for Tarrant County businesses before the pool tried up, Happel said.
While the money comes from the federal stimulus, businesses had to apply through lenders who then entered the applications into a SBA website.
That site, used to handling a much smaller volume of traffic, was frequently down, making it hard for banks to quickly input customer information.
Bankers stayed late, sometimes until 1 a.m. when the SBA site had less traffic, Noto said.
“At some point we just stopped inputting because we knew the money was gone sometime this morning,” Noto said.
Happel said other applications were delayed or originally rejected as forms and guidelines changed often. BBVA Compass nationally processed a loan every 40 seconds before the money ran out, he said.
Other options are available for small businesses.
The city of Fort Worth and small business lender PeopleFund established the Business Resiliency Microloan Program Wednesday with an initial investment of $850,000. The pool of money available for local businesses could grow to $1.7 million if demand is high. The loans can be used to pay debts, payroll or cover other bills. At least 1,400 small businesses responded to a city survey saying their biggest concern is revenue to support payroll. Applications are available through PeopleFund’s website.
Early this week Texas Gov. Greg Abbott announced a similar program of $50 million in loans for small businesses
