These Small Business Owners Feel Like They’re at the Back of the Line for Paycheck Protection Program Loans

SALT LAKE CITY — On Tuesday evening, the owner of Bam Bam’s BBQ, Cameron Treu, was masked up with gloves on, passing out orders of brisket, ribs and pulled pork in a church parking lot in Heber City. Since the coronavirus restrictions killed the Orem-based restaurant’s dine-in service and catering business, Treu, 41, has been delivering food to BBQ-lovers across the Wasatch Front to try and make up for losses.

Like millions of other small business owners in the U.S., Treu is waiting on the Small Business Administration to distribute the second round of paycheck protection program (PPP) loans. Inundated with applications, the administration has experienced technical difficulties and delays. Meanwhile, Treu has had to get creative in order to keep his business alive and avoid letting go of more employees.

“I’ve been very frustrated for sure,” Treu said.

So far, Congress has approved nearly $700 billion in loans meant to help companies pay their workers in the midst of the coronavirus-caused economic crisis. An initial $349 billion ran out in less than two weeks. A second stimulus package provided another $310 billion in loans that became available Monday. The federal government has promised to forgive the debt if a company spends 75% on payroll within eight weeks.

The program is advertised as first-come, first-served. But after banks allegedly prioritized the applications of large companies like Ruth’s Chris, Shake Shack and the Los Angeles Lakers — which received and then returned tens of millions of dollars from the first round of funding — Congress promised that more of the second round would be directed towards businesses that are truly in need.

Treu is trying to stay patient. After weeks of waiting, he found out Wednesday that CCBank of Utah had approved his application and that he has been assigned a Small Business Administration authorization number, meaning he will receive the funds, close to $80,000, within 10 days. He said he will use the money for payroll to get his entire staff back to work.

“I understand it takes some time to process these things,” Treu said. “It’s just frustrating to hear that the more powerful companies that probably needed it a lot less than the mom and pop shops were having such an easy time with it.”

In a letter sent Tuesday, Utah Rep. Ben McAdams called on the Treasury Secretary and the Small Business Administrator to release a full list of the companies that have received paycheck protection funding.

“Over the past few days the phones in my office have been ringing off the hook, and quite frankly, I’m alarmed at the stories that I’m hearing from small businesses who are trying to access these critical loans,” McAdams said at a Wednesday news conference. “They can’t help but wonder if this program is rigged to put them at the back of the line so well-connected big banks and big customers get the loans at the expense of the little guy.”

The application process

Many small business owners have reported having better luck working with smaller local banks as opposed to larger financial institutions. Mont Toronto, 31, is the co-founder of a sports media production company with two full-time employees that is based in Salt Lake City. He said the paycheck protection application process has been complicated and slow.

Toronto first tried to apply with Chase Bank as soon as the federal program was launched on April 3, but the bank’s application portal was not accessible. After several days, when Toronto was finally able to get into the portal, he said it crashed repeatedly as he was filling out the online forms.

By the time the first round of PPP funds ran out on April 16, Toronto still hadn’t advanced past the initial filing stage in Chase’s online process. On April 23, Chase bank notified Toronto that they could not verify the eligibility of his business’s payroll amount and asked him to resubmit documentation.

The New York Times reported that some large banks offered ‘concierge’ service to their wealthiest customers, walking them through the the paperwork in an efficient way.

“We definitely didn’t have the fastest access to the information,” said Toronto. “We didn’t have anyone to talk to for questions. There was no way for us to know how best to navigate the process.”

Chase’s website says the bank secured more program funding for small businesses than any other lender.

“Chase served clients as they came to us, and no business or client segment was prioritized over another,” the FAQ page reads.

Toronto eventually got in touch with a branch manager at Zions Bank in Cottonwood Heights who sat down with him in person, helped him set up a business checking account and answered his questions about the application process and necessary documentation. Toronto filled out a new application that was approved within a few hours. He is still waiting to hear if the Small Business Administration has reviewed the application.

“I would not be surprised to see a resurgence in the popularity of local banks,” said Toronto, who saw a stark contrast between his two application experiences. “This is really their chance to shine.”

Getting a leg up

While banks like Chase have denied allegations they let big businesses cut to the front of the PPP line, a wave of lawsuits allege Chase and others, including Wells Fargo, Bank of America and U.S. Bank, deprioritized smaller loans. There are also accusations that some businesses were able to get a leg up because of personal connections with the banking staff.

The co-owner of a small outdoor recreation business in Salt Lake City believes her company was able to receive $3,700 from the first round of loans because a relative introduced her to an employee handing applications at the bank she applied through.

“The process was really smooth after that,” said the co-owner, who asked that her name be withheld to protect the reputation of the business. “We had money in our account before the end of the week.”

Paycheck protection loan amounts are based off of 2.5 months of a company’s payroll. A $3,700 loan pales in comparison to the $10 million some businesses received. The Salt Lake City business owner said her company desperately needed the $3,700 to keep paying the employee who manufactures its products. She is not pleased to see much larger companies grabbing up so much of the funding.

According to data from the Small Business Administration, 74% of loans approved through April 16 were less than $150,000. Ninety-six percent were under $1 million. But the 4% that were $1 million or more, accounted for 45% of the dollars disbursed.

“It’s frustrating. You would hope in this time we would be more community-focused instead of only watching out for ourselves, but that’s not always the case,” she said.

Making ends meet

While they await public assistance, owners are struggling to keep their businesses afloat and provide for themselves and their employees.

Mark Stringham, 47, is the co-founder of an analytics consulting company headquartered in Utah County. While awaiting a PPP loan, he had to furlough two of his employees because business slowed down. Brett Parkin, 52, who runs a medical supply company with locations in Salt Lake City and Las Vegas, let go 20 part time hourly workers and cut salaries in half for the remaining employees. And Salt Lake City barber Perry Knuth, 60, has had to dip into his retirement savings after being forced to close his shop.

“We have some savings because we’re older, but to spend it sucks,” said Knuth, who has been operating Perry’s barbershop in Salt Lake City since 1986. “It’s weird not going there. I get a little crazy in the head, a little depressed at times.”

At the beginning of the month, Knuth applied for a paycheck protection loan through Wells Fargo, but his application has yet to go through to the Small Business Administration. On April 23, he submitted another application through Square, a mobile payment company. A week later, he got news that the funds had been deposited in his bank account.

On Wednesday, Knuth visited his empty shop on State Street to tidy up and give himself a haircut in anticipation of business resuming this weekend.

While restaurants and hair salons in Utah will be allowed to reopen starting this weekend, following proper sanitization and social distancing rules, business owners like Treu with Bam Bam’s BBQ are worried that customers will still be too afraid to come out and risk contracting the coronavirus.

“Reopening may end up costing more,” said Treu. “To reopen these businesses, you have to pay a lot more staff, and if we’re seeing lower sales, it’s going to be hard.”

“I’m hoping this loan will help us staff the restaurant for the first couple months when people are starting to venture back into business, and allow me to keep all my staff working even if our sales are lower than normal — which I guarantee they will be,” said Treu.

Continue reading this article: https://www.deseret.com/indepth/2020/4/30/21234652/utah-small-business-loans-ppp-paycheck-protection-program-chase-wells-fargo-zions-payroll-waiting


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