At least 13,000 business owners in Arkansas are in line awaiting another opportunity to snatch up federal emergency loans for small businesses ravaged by the coronavirus pandemic. They received good news Tuesday afternoon when the Senate approved a $484 billion aid package that devotes at least $310 billion to protect battered small businesses.
The first round of emergency aid, $349 billion that was available for small businesses, was depleted in two weeks.
"Arkansas banks have thousands of pending applications to process and we expect more will come once funding is replenished," Lorrie Trogden, chief executive officer of the Arkansas Bankers Association, said Tuesday.
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The 13,000 Arkansas businesses are in need of about $1.1 billion to stay afloat and keep workers employed, according to a survey completed by the Arkansas Bankers Association this week. The estimate is based on the number of applications that were in the approval pipeline when financial support from the U.S. Small Business Administration was depleted on Thursday. The loan portal shut down immediately that day and stopped accepting applications.
The need in Arkansas, however, is likely much larger since many banks in the state stopped accepting applications last week once it became clear federal funding would be exhausted before all the loans were submitted. There are an estimated 249,000 small businesses in Arkansas.
Arvest, the state's largest bank, quit taking new applications last week as funding was running low.
"We stopped taking new applications two days before the portal closed in order to focus on processing the ones we had at that point," said Jason Kincy, marketing director at Arvest.
"We were not able to submit some of those before the program funds were exhausted, but our intention is to ensure all of these are worked and submitted before any new applications are added to the queue."
More than 1.7 million small-business loans were made nationwide, including more than 21,700 in Arkansas valued at $2.7 billion, according to Small Business Administration statistics.
The state bankers association surveyed 41 banks and found that 12,995 applications with loan values of $1.1 billion were in line for approval when the funding portal closed.
The new aid package is scheduled for a House vote Thursday. President Donald Trump has signaled his approval of the measure.
When the fund is replenished, loan money should start flowing again this week, bankers said. "Once the light turns green, it will be a mad dash to enter loans as fast as possible," said Chris Padgett, executive director of the Arkansas Community Bankers Association.
There have been problems with the program: large public companies have gained financial support, technical challenges slowed loan approvals and banks have been struggling to keep up with the volume of requests.
"I think if you really consider the volume of loan applications each bank is responding to, it helps put it into perspective," said Edward Haddock, executive director of Small Business Administration operations in Arkansas. "We are talking about every small-business customer the lender has, plus new ones, applying for a loan within a few days.
"The high demand we have seen underscores the need for hardworking Americans to have access to relief as soon as possible," Haddock added. "We want every eligible small business to participate and get the resources they need."
The number of applications has been staggering: the Small Business Administration said last week that it made 14 years' worth of loans in just 14 days.
Arvest approved more than 9,000 loan requests and has another 2,800 application pending; Simmons Bank approved about 3,200 small-business loans, with another 1,992 that will be forwarded once new funding becomes available; Centennial Bank approved about 5,500 loans valued at $875 million and has more applications lined up.
To process the flood of loan applications, lenders dedicated teams to the effort. Centennial estimated about one-third of its 1,900 workers were involved in processing applications.
Arvest devoted resources as well; time and money just ran out before all applications could go through the loan portal.
"We simply ran out of time based on the tremendous response and volume of applications," Kincy of Arvest said. "We assembled dedicated teams from across the company to work with customers and process applications round-the-clock, but we simply had too many in the pipeline to get them all through before the allotted funds were exhausted."
The majority of the approved loans have been through the novel Paycheck Protection Program, which eliminates repayment for portions of a loan that supports up to eight weeks of payroll and covers essential business expenses such as rent and utilities. Under the loan initiative, businesses can borrow up to $10 million and have payments deferred for six months.
The Small Business Administration introduced the most relaxed lending standards in its history to put the paycheck program in place. Traditional underwriting practices that require a personal guarantee or collateral were waived and there were no agency fees applied to loans.
Once the fund is replenished, lenders can forward loan requests to to the agency.
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"Once new appropriations are in place, lenders can immediately start entering applications for approval," Haddock said.
A Section on 04/22/2020