Smaller Banks Give Some Businesses Better Shot at PPP Loans
LAUREN PEACE (HOST): On April 3rd, the Small Business Administration began accepting applications for the Payment Protection Program, or PPP. That federal program provides loans to businesses to help pay their employees during the pandemic. Applications for these loans are processed by business’ banks. As Aseem Shukla reports, many small business owners are still waiting to hear back about their applications, nearly a month later.
ASEEM SHUKLA: From her bedroom in Astoria, Shari Heller is trying to lead a bunch of girls, ages to 7 to 13, in a virtual gymnastics class.
((SHARI HELLER: Back in time, we’re going to do our right leg.... Okay…))
SHUKLA: Shari leads these classes every Monday and Thursday for Mrs. J’s Gymnastics in Williamsburg. Wei Jiang, who owns the gym, shuttered her studio on March 15th. Since then, she hasn’t had the revenue to pay her employees. Heller is a volunteer.
WEI JIANG: I continue to pay my staff for two more weeks. And then we’re just completely closed until we hear this PPP loan.
SHUKLA: Jiang applied for a Payment Protection Plan loan through her main bank, Citibank, on April 4th. Since then... radio silence.
JIANG: No communication whatsoever. So I emailed again... basically they gave me indicate, they have not even looked at my application after two weeks.
SHUKLA: By April 16th, the first allocation of federal money had run out, and Jiang got nothing. But she wasn’t alone in trying-- and failing-- to get a loan through a major national bank.
Nicholas Rhodes owns Outsnapped, which provides photobooths at big events. A month ago, he watched his business evaporate in a matter of days.
RHODES: On March 9, I believe we got our first cancellation. Within like 72 hours of that first corporate cancellation, every single one of our private events canceled for March, April.
SHUKLA: Rhodes applied through his bank, whose process he found confusing, and never heard anything back.
Joe Manganelli helps small businesses create financial plans, and he’s been helping his clients with their PPP applications. He says that three quarters of his clients didn’t get loans. But some did.
MANGANELLI: Most of those were ones who had relationships or applied as a new customer for smaller and community banks.
SHUKLA: In other words: banks whose bread and butter is serving small, local businesses.
Rory Ritrievi is the President and CEO of MidPenn Bank, a regional bank headquartered in Harrisburg. Since the PPP was signed into law, he hasn’t had much rest.
RITRIEVI: I went home that night, and I had dinner with my family. And I told them, you're probably not going to see me a lot for the next three weeks.
SHUKLA: Ritrievi set up a straightforward online process, and that generated an avalanche of new applications from small businesses.
RITRIEVI: We started to get phone calls from friends of ours, customers of ours who we had done a PPP for, who were saying, Hey, could you talk to my friend? And that happened dozens of times.
SHUKLA: Jeff Carr teaches entrepreneurship at NYU Stern, and he says it shouldn’t be surprising that big banks are prioritizing bigger businesses.
CARR: So the reality of it is if I'm a premium tier customer, I have a relationship with someone, I'm sorry, but that's just kind of the way that thing works. I'm going to pick up the phone and deal with that customer who's more important to me first.
SHUKLA: Meanwhile, Congress has authorized $310 billion in new funding for the PPP program. Nicholas Rhodes, who runs the photobooth company, has reapplied for a PPP loan-- this time through a smaller bank.
RHODES: They actually called me yesterday to let me know that they were going to be able to start submitting again. And I actually said to him, I was like, I can't wait until this is over to come and literally meet you, thank you, and move my business, business to your bank. Right?
SHUKLA: For Columbia Radio News, I’m Aseem Shukla.