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Congress has allocated $350 billion in small business loans. Why can’t owners get them?

The economic emergency driven by the coronavirus pandemic is especially brutal for small businesses, many of which experienced an abrupt and complete loss of income. Although federal aid has been allocated to assist them, logistical obstacles to getting the funds into the hands of business owners remain. We hear from some of these owners, and Amna Nawaz turns to Lisa Desjardins for policy details.

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  • Judy Woodruff:

    The economic emergency that's tied directly to the pandemic is especially brutal for small businesses all over the country.

    In many cases, some owners are beginning to face questions this spring about whether their business can survive.

    Amna Nawaz has more on the storm of troubles people are facing.

  • Amna Nawaz:

    A sudden and complete drop in business has left many businesses struggling without sales or income.

    The government is trying to help. As part of a $2 trillion aid package signed into law by the president and Congress, nearly $350 billion will be used to ensure banks provide loans and loan forgiveness for small businesses.

    But small business owners say they are having major trouble getting their loan applications moving through banks and the Small Business Administration, or SBA, which helps to coordinate those federal funds.

    Here's what a few small business owners shared with us.

  • Justin Moore:

    My name is Justin Moore. I'm the general manager of Uncle Bobbie's Coffee & Books in Germantown, Philadelphia.

    Like most retail spaces, it's been a bit of nightmare since the middle of last month. The biggest, I guess, pain point for me since we closed our doors is just worrying about everybody's well-being, not just from a health standpoint, but financially as well.

    And we have these recurring expenses, these bills, including rent and insurance, that we have no way of being able to pay without some assistance from the SBA.

  • Greg Hunnicutt:

    My name's Greg Hunnicutt. And our company is Hunnicutt Construction & Design in Houston, Texas.

    We bank with Wells Fargo. All they communicated to me after I registered was, we're still not ready to actually do the application process, and please don't contact us again.

  • Travis Powell:

    My name is Travis Powell, and I own the Best Western Plus Frontier Motel in Lone Pine, California.

    It's a small town of 2,000 people. And both of our banks, neither one of which is affiliated with the SBA in any way.

    And Saturday morning, I sat down and sent out either 32 applications and/or contact forms filled out online. I have heard back from about half of those, and they all state the same thing, that, at this time, we're only servicing people with existing loans or existing accounts.

  • Christine Goslin:

    My name's Christine Goslin, and I have owned by salon since 2002.

    I did call our bank. And I was told that there were over 400 applications and, at this point, I would be on a waitlist.

    I can — I could get by clearly this month and maybe next month. But I did tell my husband that, if we're out through may and into June, I might have to start looking for some sort of job.

  • Jennifer Myers-Pulidore:

    I am Jennifer Myers-Pulidore, owner of Myers of Keswick, a British specialty food store in Greenwich Village, Manhattan, New York.

    I have tried, I guess you can say since Friday, April 3, to apply for the SBA loan. Basically, the biggest challenge has been trying to actually get through and click submit, so that I know that my application has gone through.

  • Travis Powell:

    We're running out of money rapidly. I'm in the process of using the CARES Act to borrow from my from my 401(k). And that will allow me to pay my employees for about a month more. They're at part-time right now being paid.

  • Greg Hunnicutt:

    So, we have four full-time employees. We paid — I paid them for two weeks. That was two weeks ago. We're in week three now. I have not paid them this week.

  • Justin Moore:

    I understand that things are going to be slow, because we're dealing with some extenuating circumstances, but, at this point, almost a month after we have closed, I need some kind of timetable at this point.

  • Jennifer Myers-Pulidore:

    You know, that you're kind of in a race to fill this out and get this application submitted.

    And you think you're moving along, and then, boom, you get bumped out. So, you wonder how many people actually got to click submit before you? And it's very daunting. I have lost a bit of sleep over it.

  • Amna Nawaz:

    That loan program they mentioned is known as the Paycheck Protection Program, or PPP.

    Businesses with fewer than 500 workers can quality. They can use that money to pay for up to two months of payroll, leases and utilities. And those loans, in some cases, can be forgiven.

    We're going to talk through the details of that program and what businesses are facing right now with Lisa Desjardins, who joins me now.

    Lisa, you can hear in their voices the anxiety, the concern, the worry. How representative are some of those stories with what's happening across the board right now?

  • Lisa Desjardins:

    Amna, I and our team have been talking to a lot of small businesses. And those are completely representative of what's happening.

    Essentially, there's a massive bottleneck in trying to get this money, incredible demand and not the ability to get it out.

    Let's look at the specific issues of what's happening. Right at the front of it, banks are limiting these loans. That, in part, is because some large corporate banks feel they're under constraints, and some smaller banks worry about their balance sheet, that they can't handle as much as volume as the demand entails.

    Now, also, part of this, Amna, however, is that banks are not getting very much specific guidance from the government as to exactly who qualifies for these loans. The nitty-gritty details they need, they say they're not getting.

    So all of this, Amna, has led to long waits, sometimes a wait just to get your application in, much less to know if your application has been approved.

  • Amna Nawaz:

    Lisa, navigating a federal process, even without a global pandemic going on, can be a frustrating process.

    How much of that bottleneck is due to the fact that this is just unprecedented, this kind of program at this kind of scale?

  • Lisa Desjardins:

    Yes, that's the right question, absolutely.

    That is part of the problem. No one country, certainly not the U.S., has ever tried something like this before. I want to convey what this program looks like, a sense of scope of all of this.

    So the total program, as you reported, is about $349 billion in funding. That's been approved so far. Now, just in the past two weeks that it's been in existence, I'm told, as of today, some $151 billion has been approved for small businesses.

    So, consider this, Amna. All of last year, the SBA loaned out only $28 billion. So, they have, in the course of the last two weeks, loaned out five times what they did all of last year.

    So this is unprecedented. And it's fair to say they're working as hard as they can. But, Amna, there are others who say the SBA and Congress itself should have thought about this a month ago, six weeks ago, when they knew an economic tsunami was coming.

  • Amna Nawaz:

    Lisa, you hear even in the stories of the folks who sent in their experiences with us, there is — there's a diversity of experience. There's variation in their stories. Right?

    And when you think about who had access to capital markets and to financing, even again, when pandemics aren't going on, that varies, whether you're a minority-owned business, whether you're a rural business.

  • Lisa Desjardins:


  • Amna Nawaz:

    Is any of the recovery effort geared towards that, towards evening out some of those inequities?

  • Lisa Desjardins:

    No, not yet. And that's something that's really been discussed.

    I think that, right now, this is untested program. It's not clear where the problems are. That's why we're reporting on it right now.

    But you could hear in those stories the diversity of experience, from the construction owner and salon owner who had applied and were just waiting in a very long line to hear from their banks, to Travis. He was the hotel owner in rural America, who really wasn't sure he could find a bank that would support him, because so many banks, Amna, have limited this loan only to their current customers.

    And many banks in rural America don't carry SBA loans. They're not part of this process, usually. So that has left rural America especially sort of in a tougher position than others.

  • Amna Nawaz:

    So, Lisa, what about Congress? What are they working on? Is there more potential help on the way?

  • Lisa Desjardins:

    There is. There is talk. Everyone agrees in Washington that more money is needed for this. They disagree about how to divide it.

    The president wants $250 billion more just in general for small businesses. Democrats want it to be targeted to community banks, especially those rural ones, and for disaster loans and assistance.

    But I want to give people a sense of sort of how this all works or where we're at. So, for small businesses — here's why this matters so much — 48 percent of this nation's workers work for small businesses, and 90 percent of them told the National Federation of Independent Business, a major small business group, 90 percent said that they are experiencing an impact from the coronavirus.

    That's a huge surge in just the last couple of weeks. Moreover, Amna, most of them told the NFIB that they don't think they can survive two months without any help.

    And so what's happening, Amna, is, this is a situation where there is an economic curve, as much as there is a health care curve. And if there is not help for these businesses just in the next couple of weeks, we could see some businesses that just feel they might have to turn to bankruptcy.

    So the time is very critical for many of these businesses.

  • Amna Nawaz:

    The time is very critical. That help is critically needed, too.

    Lisa Desjardins, reporting for us tonight, thanks, Lisa.

  • Lisa Desjardins:

    You're welcome.

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