WATSONVILLE—More than 10 percent of the $349 billion set aside for the nation’s small businesses struggling to stay afloat during the COVID-19 pandemic has already been claimed as of Monday morning, according to National Economic Council Director Larry Kudlow.
Speaking to reporters at the White House Monday, Kudlow said the Small Business Administration (SBA) had approved more than 130,000 loans totaling roughly $38 billion since the Paycheck Protection Program (PPP) began Friday.
The program, part of the $2.2 trillion CARES Act signed into law in late March, provides forgivable loans for businesses of 500 employees or less. Businesses can qualify to have eight weeks of their loan forgiven if the funds are used for specific business expenses such as payroll support, mortgage payments, rent, utilities, insurance and other debts incurred after Feb. 15.
Kudlow said many of the loans have been processed through community banks.
The program is designed to limit the growing numbers of unemployment insurance claims by pumping cash into business owners’ pockets so that they can keep their employees paid. But it has only recently started to find its way after stumbling through its opening weekend.
Some of the nation’s largest lenders were unprepared for the Friday morning rollout, including Citigroup, JPMorgan Chase and Wells Fargo, as they were still seeking further information on the program from the SBA and the federal government.
JPMorgan in a release said it started accepting applications as of late Friday and Wells followed suit the following day.
Citigroup as of Monday evening was not yet accepting applications.
By Sunday Wells had already reached its $10 billion lending restrictions imposed by the federal government years ago for customer abuse and announced borrowers would need to go elsewhere. Wells said applications submitted after Sunday would not be considered.
The financial giant in a press release said it focused its lending efforts to nonprofits and small businesses with fewer than 50 employees.
“We are committed to helping our customers during these unprecedented and challenging times, but are restricted in our ability to serve as many customers as we would like under the PPP,” said Wells Fargo CEO Charlie Scharf.
The program will be put under more pressure come Friday when independent contractors and “gig” workers such as Uber drivers are allowed to apply. Faith-based groups, too, will be allowed to apply.
Lawmakers, including Sen. Marco Rubio, one of the head architects of the program, have said the federal government will need to pump more money into the PPP to help businesses weather COVID-19.
Kudlow said those talks are ongoing.
“If we need more money, we’ll seek more money,” he said.
Since the start of the shelter-in-place order in mid-March Pajaro Valley Chamber of Commerce and Agriculture CEO Shaz Roth has received numerous phone calls and emails from local business owners asking two things: (1) how can I get help and (2) where do I go?
Last week she compiled an online list of local banks and credit unions that are offering the SBA loans, and also threw together information on the available loans. Those details headlined the Chamber’s weekly newsletter sent to various businesses throughout the area.
“We’re trying to stay ahead as much as we can,” she said. “We’re trying to answer those questions before they’re asked.”
Local financial institutions Santa Cruz County Bank and Santa Cruz Community Credit Union are offering SBA loans to all, and Mechanics Bank (previously Rabobank) is only offering the loans to its customers.
