April 16, 2020
Local banks are trying to reassure customers as some small businesses fear they may have been left out in the cold after the Small Business Administration’s $349 billion Paycheck Protection Program officially ran out of money Thursday morning.
Susanne Svizeny, Greater Philadelphia regional president for OceanFirst Bank, said the bank has stopped processing new PPP loans but will continue to process existing applications — of which almost 60% have been approved already. She admits that the lack of funding will lead to some tough conversations with customers who have yet to receive approval.
“The challenge is we don’t know what’s going to happen next,” Svizeny said. “We’re telling them that we are doing everything on our end to get their applications ready for when there are more funds available. As applications come in, each customer is assigned to a banker who is communicating directly with them and letting them know where they stand.”
Svvizeny said the bank paused accepting new applications “to manage expectations” after the $349 billion ran out. That way the bank can focus on processing its existing, unfunded applications.
“So when they get more money, we can submit the information for approval and get them an E-Tran number as fast as possible,” Svizeny said. “We have been able to get funding for applications in about five days on average, though some take longer because all of the right information has not been submitted.”
Republic Bank Chairman Vernon W. Hill II said the bank is still accepting and processing loans from both existing and new customers but cannot submit the information for approval, at which point the customer would get an E-Tran number from the SBA. He said the bank has secured 2,000 approved PPP loans worth a combined $400 million and is waiting for Congress to approving more funding.
If another $250 billion is approved, Hill said that should meet most but probably not all of the demand. When asked what he would tell his customers who had not yet been approved, Hill said to make their voices heard.
“Scream about it to the press and the politicians,” Hill said. “But if they don’t agree on something by Monday I would be shocked.”
The loan program, which offers forgivable loans to small businesses as long as most of the money goes to payroll costs, was first authorized as part of the $2.2 trillion CARES Act passed by Congress and signed into law March 27 by President Donald Trump. It’s been a critical part of how small business owners hope to survive the coronavirus pandemic and social distancing measures to counteract its spread.
One of those business owners seeking PPP funding to provide a financial bridge while measures are still in place is Brian Hart of Rittenhouse Square-based public relations firm Flackable. Formed in 2014, two years after Hart graduated from Temple University, Flackable now has three full-time, two part-time and two contracted employees with just less than $500,000 in annual revenue. It represents mostly small and midsize financial and professional services firms across the country.
Revenue has dried up some over the past month due to the pandemic, so he decided to apply for PPP with PNC Bank, where he has maintained a consumer checking account for about 15 years and a business checking account for two years. He said he submitted his application when the bank started accepting them on April 4 after dealing with several technical glitches. He heard nothing back until April 14, when he received an automated email from PNC saying that he needed to resubmit payroll details that he believed he had already submitted correctly.
He said the email told him “do not include any questions in the reply as we will be unable to answer them in a timely way.” He said he has yet to receive confirmation of receipt or guidance for the next steps. And as money has run out for the program, he is losing faith that he will receive any assistance.
“The whole process was a s*** show,” Hart said. “After that bizarre email, I am not optimistic that I’ll get the loan approved. But I bootstrapped this business six years ago without any traditional banking assistance and built the company up from scratch. So I believe we will survive either way. My biggest concern is that some of my larger competitors received their funding and now they operate at a competitive advantage because their banks operated with competence. PNC failed my business. And the thing is, they were not my only option but I went with them because of the existing relationship.”
Hart outlined his plight in a Twitter thread Thursday morning, which received several like-minded responses.
PNC said interest in PPP loans has been extraordinary and it has processed and registered 20,000 applications totaling more than $9 billion. Applications that were missing required information or documentation, or that raised eligibility questions, took longer to process.
"We recognize that many eligible small businesses were not able to secure funding from the PPP before its authorized funding was exhausted," a PNC spokeswoman said. "To assist these customers, at this time, we will continue to work on PPP applications that have already been received so that they can be prepared, to the extent possible, for future registration with the SBA if additional PPP funding is authorized by Congress."
The SBA has declined to provide a number of applications, only the number of loans approved. That means the public has no idea what percentage of applicants are in Hart’s situation. The nation's two largest banks, Chase Bank and Bank of America, said they have received 300,000 and 370,000 applications, respectively. BofA would not provide any further data, but Chase said as of Wednesday it had $37 billion in loans in some stage of the application process, with nearly $10 billion funded. BofA said it continues to accept applications.
Regional banks like OceanFirst and Wilmington-based WSFS Bank are also working at high volume. WSFS said it has approved more than 2,400 PPP loans across its footprint for a total of $775 million and continues to process existing applications. Harrisburg-based Centric Bank, which is one of the Philadelphia region’s larger SBA lenders despite only have $832 million in total assets, said it has received 1,051 applications and has approved loans and disbursed money for 60% of those requests. The question remains how what is, at the very least, a pause in funding will impact those businesses yet to receive PPP approvals.