$5.4 Billion Day for Main Street Ends in Frustration, Relief

Financially stricken small business owners across the U.S. were offered a glimmer of hope Friday as applications began for a relief loan program.

The roll-out received mixed reviews and was plagued by uncertainty, aslenders struggled with a lack of detailed guidance on how to implement the unprecedented program that was rushed into existence to save small businesses.

More than one in 10 such operations are on the verge ofclosing for good within the next month, triggered by the pandemic and governments’ demands calls for many shops and workplaces to be shuttered, according a poll released by the U.S. Chamber of Commerce.

As of Friday 7:30 p.m. New York time, 17,503 loans valued at more than $5.4 billion had beenprocessed. But the numbers don’t even begin to tell the stories of entrepreneurs struggling to survive and keep their employees amid the shutdowns. Here are some of their voices on the first day of the $350 billion program aimed at giving them a lifeline:

‘Nightmare’

Clara Osterhage owns hair salons in Ohio and has been forced to lay off hundreds of employees. For her business, the loan means “survival.”

She prepared to be one of the first in line with her application on Friday. But her small regional bank told her at 11 a.m. it wasn’t going to be able to submit applications that day, and said that even big banks weren’t able to do it.

So she started calling the other banks she deals with until she found one taking applications.

“This is a nightmare,” she said, adding she doesn’t know when she’ll actually get the funding she needs. “How do I feel? Uncertain with a capital ‘U.”’

‘Surprisingly Seamless’

Kyle Stewart said his experience was more straightforward. The owner of abatting-cages and baseball training business in San Francisco filed the application throughBank of America Corp.

After spending two hours gathering the payroll and business information required and completing the Paycheck Protection Program application Thursday night, Kyle found uploading the form to the bank’s portal Friday morning was “surprisingly seamless” and automated.

After San Francisco announced a shelter-in-place order on March 16, Stewart told his five hourly workers he wouldn’t be able to pay them going forward. The timing couldn’t have been worse, as his company makes 60% of its profit in the month of March ahead of the baseball season. He’s hoping the loan will help keep them on until the business is able to reopen.

“We are still stuck on second base with 2 outs in the ninth inning,” Stewart said. “Here is to hoping for a clutch hit from the Feds.”

‘At a Loss’

Theresa Richard makes goat’s-milk soap and other specialty bath and body products on her farm in Arnaudville, Louisiana, and sells them at herBain Amour Bath & Body Co. storefront in nearby Youngsville.

The store’s been shut since the state’s March 22 stay-at-home order, leaving her one employee out of work. A paycheck protection loan would allow Richard to resume paying wages, but as of late Friday morning, she was still looking for answers.

Her local bank, Farmers and Merchants Bank & Trust Co. of Beaux Bridge, told her this week it was still awaiting more information about the program, and Chase, where she also has an account, sent her an email saying it wouldn’t be ready when the program kicked off on Friday morning.

“Nobody has a real clear idea of what they need in place to start doing the loans,” she said. (Chase parent JPMorgan Chase & Co. said later Friday that it had begun processing applications.)

Community bankers are “rightfully frustrated and, in many cases, livid” after promised online portals never went live on Friday, said Rebeca Romero Rainey, chief executive officer of Independent Community Bankers of America.

It was “a nightmare situation,” Rainey said. “Media reports continue to indicate successful launches through the country by community banks, few of which we have been able to confirm.”

On Hold

Alex Steed, co-owner of the video production firmKnack Factory based in Portland, Maine, applied twice for a disaster loan through the Small Business Administration and had yet to hear back as of late Friday. He waited on the agency’s help line for hours before the line went dead.

Steed was advised by friends familiar with the program to rehire the employees he let go on March 1 and apply to the paycheck protection program through his lender.

He received an email from his lender at 11 p.m. and another on Friday morning at 5:30 a.m. reminding him to apply.

“From 6 a.m. to 7:30 a.m. I filled out and submitted the application,” he said. “Shortly after, I got a call from that same person who clearly hasn’t slept for a week, and she said ‘I just got word that there’s been significant changes to the SBA application from last night, we will send it to you when we have it.’”

Now, he’s waiting for the bank to get back to him.

‘So Slick’

For Joseph Colangelo, CEO ofBoxcar Inc., a Chatham, New Jersey-based commuting startup, street traffic is crucial for business. He runs an app offering parking and bus services — and the lockdown has slashed commuting revenue by at least 99%.

He has six employees, who remain on his payroll for now.

As a Bank of America customer, Colangelo found the lender’s application through a web search at 9:05 a.m. Since his computer was already logged into the bank’s website, he found the form was pre-populated with most of his business information. It took him about 10 minutes to complete the application. He wasn’t asked to upload any documents — just fill out the form.

The site said that the bank would be in touch if it needed further information to verify his payroll.

“It was so slick. I was very impressed,” he said. “I was expecting an arduous, modified Google form that I was going to have to submit and submit and it still wasn’t going to work.”

Up at 4 a.m.

Robyn Schultz operates Quality Electric, a commercial light industrial electrical company based in Birmingham, Alabama, that her husband’s family has run for more than 50 years.

Schultz has been using the same lender for more than two decades and was surprised when her bank told her Thursday — the day before the application process was set to run — that it hadn’t received the guidelines. Likewise for Birmingham’s SBA office.

She began trying to apply at 4 a.m. Friday morning. At noon, her lender called to let her know the site was operational. But by the time she walked five feet to her desk, the website wasn’t up again. As of Friday afternoon, she still wasn’t able to fill out the paperwork.

‘Somewhat Optimistic’

Steve Vernetti, owner ofVernetti, an Italian restaurant in Los Angeles that’s a favorite of Mayor Eric Garcetti, said he had to fill out multiple applications because they kept changing, including as recently as Friday morning.

“It seems like the program is being fleshed out in real-time,” Vernetti said.

Vernetti said his business manager has a close relationship with his bank that’s keeping them in the loop, and that “I can only imagine what the confusion is like for those who don’t have the advantages we have.”

The restaurant owner said he’s been paying his 20 employees for two weeks out of his own pocket but won’t be able to continue. If he gets some confirmation of the SBA funding, he’ll consider opening for pickup and delivery services in two weeks.

“I am starting to see a way through this, and I am feeling somewhat optimistic,” Vernetti said.

‘Eight Weeks Is Ten Years’

Erik Bruun ownsSoCo Creamery, an ice cream shop and wholesale supplier in Great Barrington, Massachusetts. Foot traffic into his store is slower this time of the year, but is down 60% from where it typically is.

Wholesale ice cream sales, which make up the majority of revenue during the off-season, have completely stopped.

Bruun applied for an emergency loan last week but has yet to hear back. He tried to apply to the paycheck protection program as well, but his local bank told him the application changed and he’d have to wait until they receive instructions to proceed.

The application made it sound like the money would be dispersed in 72 hours. Time is critical right now, and even if his paycheck protection application is approved he’s not sure if the duration will be enough.

“Eight weeks? Eight weeks is ten years right now,” he said. “Eight weeks ago we lived in the allegedly good times. Now we live in the Great Depression.”

One small perk with the lockdown: as people hunker down, pint sales in local grocery stores are up.

‘So Much Confusion’

Wahid Nassar, who runs a restaurant in Highlands, New Jersey, tried going online Friday morning to apply for the loan through his lender, Bank of America, but repeatedly got error messages.

“There’s so much confusion and hard to get a straight answer from anyone right now,” he said.

‘Bringing Hope

At 9:30 a.m. Friday, the paperwork, so utterly confusing at times, was finally in order for Jason Maxwell. The CEO of MassPay, a payroll and human resources firm that employs 59 people in Beverly, Massachusetts, faxed his application for an SBA loan to his banker in nearby Salem.

Late Thursday, Maxwell was told the federal loan program had tweaked its application. Luckily, Maxwell has a good relationship with his banker, Ed Lomasney, a senior vice president atSalem Five Bank. Lomasney contacted Maxwell, who immediately filled out the new form.

Maxwell has worked with Lomasney for seven years, even switching lenders when the banker relocated to a new financial-services institution three years ago.

“He’s the kind of guy who would knock down doors for us,” Maxwell said of his financial guru, who was too busy Friday with applications to comment.

Maxwell has also been helping other business owners navigate the programs and loans available. He called the owner of his favorite coffee shop, who is not a client, when he heard the man was feeling utterly hopeless, and offered information and advice on how to get some relief.

The programs “are bringing hope to a pretty grim situation,” Maxwell said.

— With assistance by Zachary Mider, Edward Ludlow, Saijel Kishan, Mark Niquette, Max Reyes, Christopher Palmeri, Tom Moroney, and Emma Kinery

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