More small-business relief funds on the way

President Donald Trump on Friday signed a bill that allocates an additional $320 billion to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) — and Virginia banks are poised to resume making loans and taking applications Monday.

The SBA approved 1.7 million loans before the initial $349 billion small-business relief fund ran out after 13 days on April 16, with Virginia banks making 40,371 loans totaling $8.72 billion. 

“We know that there’s a big, long list all around Virginia and all around the country, of [backlogged] applications that are ready,” Virginia Bankers Association President and CEO Bruce Whitehurst said. “In this pause that we’ve had while waiting for Congress to act, that has given borrowers who needed more documentation to [provide] that and banks the opportunity to make sure that as many applications as possible are fully ready to be loaded into the SBA system when it opens back up.”

During a time when many businesses are furloughing employees and struggling to operate, small businesses that receive the forgivable PPP loans are allowed to use the funds to meet payroll costs and make mortgage interest, rent and/or utilities payments. 

PPP loan applications will reopen on Monday, April 27, according to a joint statement from U.S. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza.

John Asbury, CEO of Richmond-based Atlantic Union Bank, said that his bank left its internal application portal open after the funds ran out last week, in anticipation that Congress would quickly approve a new round of relief funding. “We’re very intensely focused on completing the existing applications that we have,” Asbury added. “We already have 2,000 internal approvals that we have processed since the end of round one.”

In this new round of funding, $30 billion will be set aside for applications from small banks and $30 billion will be set aside for applications from mid-size banks, including Atlantic Union, Asbury said.

During the first round of funding, several large banks, including Capital One and Wells Fargo, struggled to even get applications open for their customers. 

McLean-based Capital One Financial One Corp. has come under fire from customers for not making PPP loan applications available until the day the loan funding ran out. Some small-business customers have circulated a petition to gather support for filing a class-action lawsuit against Capital One.

Paul Trible, co-founder and CEO of Richmond-based men’s clothing company Ledbury, had banked with Wells Fargo for years, but after Wells Fargo was unable to offer PPP loan applications to Ledbury and tens of thousands of other customers, Trible moved his banking business to Atlantic Union, which the company had banked with previously. 

“Because of the demand and the issues they ran into, [Wells Fargo] had to stop,” Trible said. “It’s one of the largest banks in the country, and they couldn’t give any of that money out in the beginning, and almost through the entire life of the first round of PPP funding.”

After returning to Atlantic Union, Ledbury was able to secure a PPP loan. “It just hit home the importance of personal community relationships and people banding together to fight for you as a person and as a company,” Trible said. “[We felt we were] less of a number [at Atlantic Union] and more of a well-known entity.”

Stevie McFadden, founder of Richmond-based interior design company Flourish Spaces, had a similar experience with South State Bank, a mid-size regional bank based in Columbia, South Carolina. Although her company was eventually able to secure funding, the whole experience of gathering materials and getting everything submitted for the loan was draining, she said. 

“There were just so many unknowns,” McFadden said of waiting to find out if her PPP loan application would be approved. “It sort of felt like it went into a black hole. The extremes of hope and fear just take you on an emotional roller coaster.”

Another unknown is how long the next round of PPP funding will last. 

“There’s such pent-up demand and a backlog of requests, that I think this second round of funding will be gone in no more than three business days,” Asbury said. 

Another issue with the last round of funding is that large, publicly traded corporations received nearly $600 million in PPP funding — money that was intended to go to small businesses — by applying through smaller subsidiaries. Some companies, including Shake Shack Inc. and Ruth’s Hospitality Group Inc., which owns Ruth’s Chris steakhouses, now say they’re going to return the funds, which would go back into the pool of available funds for the PPP loans.

Despite uncertainty, Whitehurst emphasizes the historic nature of the PPP funding.

“To push out $349 billion in two weeks on the rails of the same system that did 1/15 of that all of last year in lending,” Whitehurst said, “and to triple the amount of SBA lenders in the span of two weeks and for banks to go ahead when guidance was coming out in a rolling fashion — it’s amazing that we’ve accomplished this much.”

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