SPOKANE — What started as a bold plan to save small businesses by a federal agency best known for disaster loans has turned into a massive $780 billion bailout that local bankers believe was necessary to prevent more catastrophic economic damage from the coronavirus pandemic.
The U.S. Small Business Administration’s officials on Wednesday announced the Payroll Protection Program has essentially run out of money and is no longer available through banks, although grants still can still obtained through specialty organizations.
Ezra Eckhardt, president and CEO of Spokane Teachers Credit Union, said STCU provided more than 2,000 PPP loans totaling about $70 million to businesses in the region, helping many to remain solvent.
“In our community, we certainly lost businesses,” Eckhardt said. “But I think we would have lost two times, three times, four times more if not for the PPP and some of the other programs that were available.”
Jack Heath, president and chief operating officer of Washington Trust Bank, agreed, saying the SBA somehow powered through initial uncertainty and a clunky first set of procedures to deliver a lifeline to small- and medium-size businesses.
“I think it worked, except it ran out of money,” Heath said. “We still had applications in process. We are hoping to get those to the finish line. We had to suspend new applications, but we continued to have demand.”
Many of the businesses late to the game were those that thought they would have to close but realized they could pull through, Heath said. All told, Washington Trust processed a staggering 8,500 loan applications for about $1.75 billion.
“The rules evolved because of the quick roll out of the program,” Heath said. “But our customers did a good job of pivoting. So, I think it’s really worked really, really well.”
As of Sunday, the SBA had approved 81,719 loan requests that provided about $5.7 billion for small businesses in the state of Washington, according to data released by the SBA. The data did not have breakdowns for individual counties.
So far this year , the average loan size in the U.S. was $46,000, less than half the $101,000 average loan in 2020. That is a sign that smaller companies unable to get loans last year were now getting funding.
Companies have been drawn to the loans because they promised forgiveness if the money is used for payroll and other essentials.
But, while the PPP helped save many companies devastated by the pandemic, the Biden administration has estimated that more than 400,000 U.S. businesses have permanently closed because of the outbreak.
Aid remains available to small businesses through SBA Economic Injury Disaster Loans, and restaurants with no more than 20 locations can apply for grants through the Restaurant Revitalization Fund that began accepting applications Monday. Help also is available to owners of theaters and other entertainment companies under the Shuttered Venues Operator Grants program.
Heath said that unlike the PPP loans, restaurant and venue owners have to contact the SBA directly to qualify for those programs, which he said are essential for concert halls, restaurants and other places that were forced to shut down completely.
“In talking to the venues that have been closed and restaurants that experienced real hardship, I expect the demand to be significant and the funds to go away very quickly,” Heath said.
The Restaurant Revitalization Fund just began accepting applications this week and only has a pool of $28.6 billion. But, it pays as much as $10 million per business or $5 million per location. The Shuttered Venues grants will pay up to $10 million or 45% of the venue’s gross revenues for a year.
If restaurant or venue owners have questions, “reach out to your banker,” Heath said. “Even though we are not processing applications, we are happy to help clients with it.”