When the Paycheck Protection Program went live last Thursday, it prompted hundreds of small business owners in Missoula to file a claim, hoping to keep their employees paid and their business afloat as the pandemic batters the economy.
That has placed added pressure on local lending institutions, which are now racing to keep up with demand, even while taking precautions to protect their vital employees from the virus.
“We’re fighting away, but you throw in the dynamic now of almost 100% of your business clients needing your assistance, and that dynamic is the perfect storm,” said Bob Burns, president of Stockman Bank in Missoula. “If we weren’t dealing with the virus component, we’d have more staff and be able to work through them quicker.”
Over the past five days and through the weekend, Stockman Bank employees in Missoula have started processing loan applications at 4 a.m., often working through midnight to keep up with demand.
Since the $350 billion loan program was launched last Thursday to rescue millions of small businesses, Stockman has submitted 130 files seeking more then $20 million – and that’s just in Missoula and just one bank.
Burns said the average loan is around $150,000.
“If anything has really surprised me, it’s just how much revenue our clients generate that in turn pay their employee base,” Burns said. “Our fear, since this went live Thursday night, was trying to get our customers approved before the money runs out, because it will.”
The lending program is one piece of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act passed last month by Congress. It offers loans of up to $10 million to companies who employ fewer than 500 people, and the loans are forgiven so long as a businesses meets certain conditions.
But some banks have already stopped taking loan applications under the program, including Wells Fargo. That bank already has received enough loans to place it at its $10 billion maximum.
On Monday morning, the U.S. Small Business Administration said more than 100,000 loans had been approved and funded under the program, accounting for $30 billion.
“The important thing for our clients here in Missoula is that they continue to pay their employees, regardless of whether they’re working or not,” Burns said. “For many of them, the sooner they can access these funds, it will ensure they don’t have to lay off additional employees. It’s critical for our clients to keep their employees on board and continuing to pay them.”
Buns said those businesses that are approved under the program will likely receive funding later this week, though many need it now. Some businesses may not receive funding at all, depending on their bank and how long they wait to apply.
“Ninety percent of every bank’s commercial portfolio is probably eligible or in need of these funds,” said Burns. “But there’s only so much money and only so much capacity from a process perspective.”
Uncertainty around the pandemic and how long it will last has many economists guessing how fast and when the economy will turn around. But many agree that the economic landscape will have shifted, and some businesses may not survive.
“I think this will take time to rebound and recover, but I have a lot of faith in Montana in general,” Burns said. “We’re a hard working bunch of people. These business owners will do anything they can for their employees who have been with them, in many cases for a long time.”