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State adds $1M to business loan fund

by Andrew Moreau | April 29, 2020 at 1:50 a.m.

Arkansas small businesses can again turn to the state's quick action loan program to gain operating capital while they continue applying for federal support.

Gov. Asa Hutchinson has contributed another $1 million to the state's quick action loan fund, which was established in March to provide $25,000 loans to small businesses with fewer than 50 employees.

State loans helped retain 2,500 full-time jobs and another 1,000 part-time jobs, according to statistics from the state Commerce Department. Arkansas distributed 246 bridge loans before the $5 million ran out in mid-April. The average loan was $20,325.

"The increased funding will allow us to approve additional applications, which are being reviewed this week," Secretary of Commerce Mike Preston said Tuesday. "Given the level of funding and the number of eligible companies with applications in the pipeline, the average loan amount will decrease as we stretch the remaining funds to help additional small businesses."

[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]

About 100 small businesses were lined up to get state funding when the fund was depleted. The $1 million replenishment should cover their needs, the governor said in announcing the contribution on Friday.

"That should be sufficient enough for the additional loans that are backed up and have not been fulfilled," Hutchinson said.

Arkansas bankers, meanwhile, reported having continued difficulty on Tuesday sending loan applications to the U.S. Small Business Administration for approval. SBA's loan portal crashed throughout opening day of a new round of funding on Monday.

It was a hit-or-miss process again Tuesday, with state bankers reporting minor improvements though overall they said the SBA portal was still slow and time-consuming.

Simmons Bank reported the portal was inaccessible for about 90 minutes mid-day. "We've had a good day [Tuesday] despite continued challenges with the system," said Mark Wilson, director of SBA lending at Simmons Bank. E-Tran was operating, but slowly, in the afternoon, Wilson said.

Bank OZK said it has more than 2,000 small business loans it is working to enter but is having trouble accessing the SBA portal.

"Unfortunately, because of the technical issues on SBA's side, we were only able to get about 150 applications through the system since the new round of funding was authorized," Chief Administrative Officer Tim Hicks said Tuesday.

The Arkansas Bankers Association estimates there are about 13,000 small businesses in the state seeking support through the federal Payroll Protection Program.

To get a paycheck protection loan, applications from small businesses must be forwarded through a lender with access to SBA's E-Tran application portal. That online portal continues to malfunction because it is clogged with requests.

On Tuesday, SBA notified lenders of new requirements to help alleviate the stress on the E-Tran system. The agency said Robotic Processing Automation, or RPA, could no longer be used to submit loan requests for the Paycheck Protection Program.

Robotic entries "burden the processing system and diminish its capabilities," SBA said in a note to banks and financial institutions. "Without RPAs, the loan processing system will be more reliable, accessible and equitable for all small businesses."

Through Tuesday afternoon, SBA was reporting it had approved more than 475,000 paycheck protection loans submitted by more than 5,100 lenders. Loan volume quadrupled from Monday, when SBA reported more than 100,000 loans had been approved for more than 4,000 lenders.

At the state level, quick action loans provide up to $25,000 per business, depending on weekly payroll. Once submitted, applications go through an expedited process that includes final approval from Preston.

State bridge loans carry no interest and are intended to give businesses breathing room while they pursue more substantial SBA loans of up to $10 million. "We have received very encouraging feedback, with companies noting that these funds are allowing them to remain in operation," Preston said.

Business on 04/29/2020

Print Headline: State adds $1M to business loan fund

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