Big banks let small businesses down on SBA loans

SANTA BARBARA, Calif. -- The $350 billion dollar federal program to help small businesses pay their employees during the Coronavirus pandemic ran out of money Thursday. Many businesses were shut out from receiving money they were counting on to survive.

"There's nothing! And it's a month later," Santa Barbara Auto Stereo and Wireless owner Alan Gold said. "It's not fair."

Gold has been paying his two employees who have not been able to work for him because of the Coronavirus. He's also been paying rent, insurance and all other expenses while business has dropped to 20% of what he's used to.

"I just feel like I've been really cheated," Gold said.

The Paycheck Protection Program is a Small Business Administration Program where business owners can apply for a forgivable loan through a bank or credit union.

Business owners we spoke with told us who they bank with made a huge difference. Local institutions that could complete the process under one roof without sending the application out to be processed appeared to have an advantage.

"If you didn't have that local person fighting for you, you didn't get the money," Gold said.

Jiffy Lube franchise owner Sean Porcher had a similar experience with a big bank that was not helping him get the emergency funding. He made the move to to the Santa Maria based Coast Hills Credit Union, and his loan was quickly processed.

"Coast Hills really stepped up," Porcher said. "I reached out to them and within ten minutes they were on the phone with me to help us out. Anything they could do to kind of guide us through this."

Coast Hills CEO Paul Cook said the credit union had a 100 percent acceptance rate with people who completed the application. That's 383 loans for $32 million dollars approved for small businesses.

"We are very nimble," Cook said. "We were able to focus the entire business team on getting these Payment Protection Program checks and applications in place and it's really made a difference to the community."

Locally owned American Riviera Bank also reports great success with Payroll Protection applicants, obtaining final loan approvals for 420 small businesses. They estimate that will cover more than 13,000 employees in Santa Barbara and San Luis Obispo Counties.

Meantime a Santa Barbara business owner tells us she was second in line at a local branch of a big bank and did not get her loan.

Gold says he inquired at his large bank the first day the loan was available. He applied as soon as they started taking them, and he checked in at the local branch every day after. Gold says he was assured he did everything right and told his application was sent out for processing by the bank and there was nothing more that could be done locally.

"My application was right in cue to get approved and so now I am sitting here with absolutely not one dime of assistance," Gold said.

Are you a local business owner with a story to tell about the Paycheck Protection Program, or the Economic Injury Disaster Loan? We want to hear from you. Email scott.hennessee@kcoy.com or share your experience on our Facebook page.

The Small Business Administration Administrator Jovita Carranza and U.S. Treasury Secretary Steven Mnuchin issued a statement touting the success of the Paycheck Protection Program Friday afternoon, reading in part:

“The Treasury Department and SBA launched the unprecedented Paycheck Protection Program in just one week.  Following its launch, the SBA processed more than 14 years’ worth of loans in less than 14 days, which will protect a vast number of American jobs. 

“The PPP enjoyed broad-based participation across the country from lenders of all sizes and a wide array of industries and businesses.  From its start on April 3, PPP provided payroll assistance to more than 1.6 million small businesses in all 50 states and territories.  Nearly 5,000 lenders participated in this critical program, including significant lending by community banks and credit unions.  Nearly 20% of the amount approved was processed by lenders with less than $1 billion in assets, and approximately 60% of the loans were approved by banks with $10 billion of assets or less. No lender accounted for more than 5% of the total dollar amount of the program."

Congress is negotiating proposals to add more money into the Paycheck Protection Program. Banks and credit unions are working with customers to process and hold applications in hopes that more money will become available.