On Monday, Teton Toys owner Wes Gardner described himself as “miserable.”
Despite a week of preparation he had been unable to apply for Paycheck Protection Program loans for his stores in Jackson and Lehi, Utah.
What a difference a day makes.
At midafternoon Tuesday he heard the good news from the Bank of Jackson Hole. His application had been approved and he might receive the money within days.
But the other bank he works with, one headquartered out of state, had only just opened up its application portal, he said.
“Kudos to Bank of Jackson Hole,” Gardner said. “It just shows you that the local bank did the right thing.”
Friday was opening day for banks and credit unions to start processing the loans, which are one element of the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. The loans, which are to be used primarily for payroll but also certain other expenses, like rent, are low-interest, but they are to be forgiven if businesses don’t slash staff numbers or payroll.
The Small Business Administration runs the program while banks and credit unions make the loans.
But banks didn’t receive the rules from the Treasury Department until late Thursday, and things changed up to the last minute. At the behest of the banking industry, for example, interest rates on loans were raised to 1%, versus the 0.5% originally planned.
Businesses around the country ran into snafus as they tried to apply.
One of the first problems prospective applicants found was that some banks would work only with established customers or with certain kinds of customers. Then there was confusion over what kind of documentation would be required for the loans.
“Every day the paperwork is changing,” Terra owner Dana Sanders Souther said Friday. “We are all filing our paperwork, and it becomes irrelevant. … This is so unbelievably confusing and frustrating.”
Gardner was particularly irritated by problems nailing down the definition of payroll costs. To determine the size of the loan a formula is used; average monthly payroll costs times 2.5, or up to $10 million. But there is more than one way to calculate payroll costs, and that was a problem. Gardner said he gathered one set of information for one bank and another set for the other.
On Tuesday, Gardner said, he learned that, unbeknownst to him, Bank of Jackson Hole had taken the information he’d provided and filed the application for him. That was good news.
The loans aren’t something he and others feel they can ignore now that coronavirus precautions have shut down or severely limited their operations.
Teton Toys, for example, has gone to curbside service. Terra is operating by appointment, with drop-off, pickup and local delivery service. Another business, Simply Health, has temporarily dropped some treatments.
“For a small business owner like myself, I still have my staff,” said Jennifer Nelson-Hawks, co-owner of Simply Health. “I am doing everything I can to keep them employed and the doors open to the community.”
Souther said of the loans: “It’s just wanting to know there’s this little bit of a safety net so you can breathe for the next few weeks.”
Though the deadline to apply for PPP loans is June 30, she and other business owners worried that the $349 billion Congress allocated will be snapped up before they even get in the queue.
In fact, Wells Fargo announced Monday that the “intake from customers indicates Wells Fargo has reached its capacity of $10 billion to lend under the PPP.” The company said it would focus lending to nonprofits and businesses with fewer than 50 employees and would give fees received under the program to nonprofits focused on small business.
“Not everybody is going to be able to make this happen,” Souther said. “Eventually the money will run out. That’s why there’s a race to get it done.”
But there’s a positive development on that front. According to news reports, Treasury Secretary Steve Mnuchin said he would seek another $250 billion for the Paycheck Protection Program.
Though Gardner was feeling good Tuesday afternoon, he noted, “I can’t say the process hasn’t been frustrating.”