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Wednesday morning’s Development Commission meeting.
Sarahi Jordan Vega has seen firsthand just how inundated banks are by small businesses desperate to receive federal assistance during the Covid-19 public health and economic crises.
The Connecticut-based bank where she works as a vice president received 400 applications within minutes of launching its online application form Monday morning for the federal Paycheck Protection Program (PPP). By the end of the day, she expects that number to top 1,000.
Jordan Vega gave that update Wednesday morning during the regular monthly meeting of the city Development Commission, held not in its usual gathering place on the second floor of City Hall, but entirely online via the Zoom teleconferencing app.
A Westville resident, Albertus Magnus graduate, and member of the commission, Jordan Vega works as a vice president portfolio manager and senior Small Business Administration (SBA) specialist with Bankwell.
Jordan Vega calls in to the meeting.
She called in to Wednesday morning’s commission meeting to give a first-person view on how private banks across the country are scambling to process SBA applications and distribute federally-backed small business loans from the roughly $350 billion pool of small business relief funds included in the $2.2 trillion CARES Act.
Her experience comports with what small business owners and bankers around the country have been saying to anyone who will listen since PPP officially launched last Friday: That there is an incredible amount of demand for this program, that the bureaucracies required to navigate it are challenging and even cumbersome, and that Congress needs to appropriate more money to help tide small businesses over as much of the economy remains shut down due to necessary public health social distancing measures.
“It’s been an overwhelming undertaking,” Jordan Vega said. “The program has been changing on a minute by minute basis.”
And from, her perspective, the challenges in making this program work are well worth confronting by banks and small businesses who may at first be daunted. “It’s going to help small businesses in the long run be able to support their payroll,” she said.
Small businesses, nonprofits, and independent contractors with fewer than 500 employees can apply through private banks for a loan worth up to eight weeks of a business’s operational costs, including payroll, employee benefits, utilities, mortgage interest, and rent.
Those loans are capped at $10 million each, and they will be entirely forgiven by the federal government if qualifying businesses retain their employees during the term of the loan and spend at least 75 percent of the loan amount on payroll.
City strategies for supporting small businesses during the crisis.
Repayment of the loan can be deferred for six months, with interest rates starting at 1 percent and the maximum term of repayment being two years.
Jordan Vega said that PPP loans can be used to refinance existing Economic Injury Disaster Loans (EIDL) that small businesses may have already received from the SBA.
She said that her bank launched their PPP online application process on Monday because they had to make adjustments to the bank’s typical SBA application form over the weekend.
“We received, in a matter of minutes, 400 applications,” she said. Those applications have kept coming all night and day since then. “By the end of the day, we’ll reach about 1,000 applications.”
“We’ve been very busy working throughout the week and throughout the night to implement what the Treasury has asked us to do,” she said.
She noted that many banks have chosen only to provide loans to existing customers. She said that Bankwell too is currently only accepting applications from existing customers. Unlike other banks, they’re accepting applications from customers who have either an existing lending relationship or an existing deposit relationship with Bankwell, as opposed to limiting applications to just the former.
“It is an arduous and big challenge,” she said. “But I think in the long run, with everyone’s support and all these banks that are approved lenders, we’ll be able to support our businesses and keep our residents fiscally employed.”
Development Commission Vice-Chair Anthony Sagnella (pictured) asked how much longer Jordan Vega expects banks will be accepting PPP applications.
President Donald Trump said on Tuesday that banks have already processed $70 billion in PPP loans for 250,000 small business applicants.
“I imagine there’s a cap on the amount of money that the government is able to back,” Sagnella said. “How is it being tracked as all these banks, including your bank, is being inundated with applications?”
Jordan Vega said that she would have to get back to the commission with details about what mechanisms are in place at banks to track the remaining availability of PPP funds. She noted that the last date for PPP applications is June 30, and that the federal government is now working on adding another $250 billion to the original $350 billion appropriation.
Indeed, Treasury Secretary Steve Mnuchin has called on Congress to add another quarter trillion dollars to small business relief fund. And Republican Senate Leader Mitch McConnell has expressed interest in voting on such a matter as early as Thursday.
“I pray to God that this does go through,” Jordan Vega said. “I think the $350 billion that they have allocated is not going to be enough. The influx of applications is just immense.”
Who at the bank is reviewing these applications? Sagnella asked. All Bankwell staffers? Any outside hires?
“It’s our staff at the bank that are reviewing the applications,” Jordan Vega replied. Once a small business submits a complete package, she said, her staffers review it, she takes a look and makes sure it meets SBA requirements, and then submits to the federal government. “So far we’ve gotten some approvals from the SBA to go ahead and disperse these funds,” she said.
City Development Officer Carlos Eyzaguirre (pictured) noted that PPP is also open to nonprofits, independent contractors, and other “gig economy” workers. Those latter workers have to wait until April 10 before they can start applying for loans, however.
Sagnella said he was surprised to see that various regional archdioceses of the Catholic Church have applied for PPP relief, since religious nonprofits are explicitly included as eligible in this program.
“They need to keep their people employed,” Jordan Vega said. “This would be a good program for them to apply to.”
Development Commissioner and Bradley Street Bicycle Co-Op Foudner John Martin (pictured) asked city Economic Development Administrator Michael Piscitelli what the top three messages city development staff want commissioners to relay as the pound the virtual pavement in the coming days and weeks, talking with local business owners about how they can best stay afloat during this crisis.
“Encourage everyone to buy local,” said Piscitelli (pictured). He pointed to the Together New Haven campaign, an online marketplace for local small businesses to promote and sell their companies. “Anything we can do to end up with local purchasing is really important.”
The second, Piscitelli said, is to let businesses know about the PPP federal relief and to provide as much information as they can about how to navigate the various federal and private bank bureaucratic hurdles for accessing said relief. Direct business owners with questions to the city’s economic development team and, in particular, to its small business support staffers, who can provide help.
And third, he said, remember that “it will be a very uneven” recovery. “There’s no light switch associated with this,” he said. The city, business owners, and workers should plan for disrupted operations, social distancing requirements, and reduced occupancy orders potentially lasting for weeks and months to come.
“We’re far from out of the woods on the Covid crisis,” he said.
I think you mean quarter trillion with a T, Tom. And as a small business owner with PPP apps somewhere "in the process" at both Bank of America and Chase, I really hope that happens.
[Note: Thanks for the correction!]