Page 19 - BusinessWest April 27, 2020
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 to keep her organization operational. That contrast — between despera-
tion and relief — explains why so many small businesses are frustrated with the PPP, which quickly ran out of money, and also generated plenty of confusion in the banks where business owners applied for loans.
The PPP is a small-business stimu- lus program included in the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP initially provided $349 billion for U.S. Small Business Administration (SBA) lenders like bankESB to fund loans to businesses in order to guar- antee eight weeks of payroll and other costs to help businesses remain viable. To qualify, businesses must have 500 or fewer employees and demonstrate that they have been negatively affected by COVID-19.
When the $349 billion ran out in less than two weeks, the shortfall gen- erated an immediate outcry — not only
“It was harrowing. They did, in fact, rush it because they felt the urgency ... but the program was not ready for prime time.”
for a second infusion of funding, but because of news that large, national companies were claiming tens of mil- lions in PPP funds while small busi- nesses couldn’t get access.
That second round of funding — $310 billion in total, approved by the U.S. Congress on April 22 — may not last much longer, but banks have likely learned lessons from the first round.
Sense of Urgency
Matt Sosik, president and CEO of bankESB, remembers those first days of the PPP well.
“It was harrowing. They did, in fact, rush it because they felt the urgency
... but the program was not ready for prime time,” he recalled. “When it rolled out, a lot of people were frustrat- ed, but — and I’m not trying to sound defensive — I wish people wouldn’t blame local banks. We were in the dark; the customers knew what we knew, and it wasn’t enough. They didn’t pro- vide enough instruction.
“In the end, we made it out on the other side, and we got caught up,” Sosik told BusinessWest in mid-April, noting that the three banks in the Hometown Financial Group family, including bankESB, approved $100 million under the program, and spent the next week getting money into
the hands of the people who were
“It was very, very difficult — a mas-
sive amount of work by our employees. They kept grinding and got us out on the other side of things,” he said.
U.S. Treasury Secretary Steven Mnuchin reported that, following the PPP launch, the SBA processed more than 14 years’ worth of loans in less than 14 days.
“The PPP enjoyed broad-based participation across the country from lenders of all sizes and a wide array of industries and businesses,” he noted.
“From its start on April 3, PPP provided payroll assistance to more than 1.6 mil- lion small businesses in all 50 states and territories. Nearly 5,000 lenders participated in this critical program, including significant lending by com- munity banks and credit unions. Near- ly 20% of the amount approved was processed by lenders with less than $1 billion in assets, and approximately 60% of the loans were approved by banks with $10 billion of assets or less. No lender accounted for more than
5% of the total dollar amount of the
The majority of these loans — 74%
— were for under $150,000, he noted, but that didn’t stop a swell of outrage following reports of large companies, from Ruth’s Chris Steak House to Halli- dor Energy, claiming eight-figure PPP loans.
Few in Washington balked at the need for additional funding. The sec- ond round of $310 billion is part of a
Continued on page 39
       Richard F. Burkhart, CPA and Salvatore J. Pizzanelli, CPA, JD, PFS
The talented team at Burkhart Pizzanelli
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