Unless small-business owners receive aid within the next month or two, half of them won’t survive the economic fallout caused by the COVID-19 pandemic, according to the National Federation of Independent Business (NFIB).
And the rocky rollout of federal relief applications has some worried.
The organization has been inundated by calls and emails from small-business owners who have reported difficulties with applying for federal aid since April 3, the first day of the relief application rollout, NFIB California Director John Kabateck told The Epoch Times on April 5.
“The banks are throwing up roadblocks, and, in many cases, not letting small businesses apply. The government agencies are once again filled with bureaucracy and not prepared to process these requests. And, both sides are pointing fingers at each other,” Kabateck said.
“We’re in a crisis right now. Enough with the finger-pointing among the banks and government agencies. It’s time to act and unclog the pipeline to help small businesses get the financial support they need today,” he said.
There are two major components to the recently passed $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. One is the $350 billion Paycheck Protection Program (PPP) and the other is the Economic Injury Disaster Loan (EIDL) program.
There seems to be some confusion or reluctance among some banks to process the PPP loans without further guidance, or assurance, from the U.S. Small Business Administration (SBA), Kabateck says.
The SBA and U.S. Treasury Department have urged banks to get applications up and running. But many still had concerns about the logistics of how the lending process is supposed to work as late as April 2.
Wells Fargo reported problems accepting applications on its website, telling applicants they would follow up with them via email.
Bank of America came under fire from loan applicants on Twitter. Some complained the bank had denied them a PPP loan, claiming they were ineligible to apply because they hadn’t already done business with Bank of America’s small-business arm or didn’t already have a Bank of America small-business credit card.
A Bank of America message on Twitter contained a link that stated, “To be eligible, you must have a Small Business lending and Small Business checking relationship with the Bank of America as of February 15, 2020, or a Small Business checking account opened not later than February 15, 2020, and do not have a business credit or borrowing relationship with another bank.”
“Twelve years later, the nation is facing a catastrophe, and we’re paying you [banks] to help provide money—not your money, government money—to small businesses.”
Rubio expressed his frustration with some banks placing “all these crazy restrictions” on potential borrowers.
“Please don’t be a bunch of jerks, OK? When you needed the country to help you, they did. Now, the country needs you to help them, and we’re paying you to do it. And, it’s the government’s money—the taxpayers’ money—so let’s all do our part please,” Rubio said.
“We are hearing from far too many small businesses today [April 3] that they are being shut out of the Paycheck Protection Program forgivable loan program,” Close said. “America’s small businesses are facing an economic crisis that is not of their making. These small businesses did their due diligence and were ready this morning, but are hearing ‘no.’”
NFIB is running a new survey to find out who is experiencing problems with PPP loan applications, what roadblocks they are encountering, and why, Kabateck said.
“We put out an action alert to our members,” he said. “NFIB is mobilizing our 300,000 members across the country to contact their elected officials in Washington to urge that this nonsense stop.”
While he acknowledged the sudden onslaught of the global COVID-19 pandemic hasn’t allowed much time for relief planning, Kabateck said U.S. banks and government leaders need to act swiftly.
“Nobody has ever been to this rodeo before, so the process problems are understandable, but not acceptable,” Kabateck said.
“I get phone calls daily from small business owners terrified they may need to close up shop in the next few weeks, let alone the next couple of months,” he said. “A system glitch or logjam should not be the root of their closure and staying up at night. We need to fix it, and we need to fix it now.”
The poll on the impact of the COVID-19 outbreak on small business shows that 92 percent of small employers have been negatively affected by the pandemic, a continued escalation from 76 percent of small employers reporting negative effects 10 days earlier.
