Thousands of Hawaii-based small businesses have been approved for hundreds of millions of dollars in small business payroll loans.
The Payroll Protection Program opened for applications on Friday, April 3. Now, local banks have begun processing the approvals, and are starting to get the money out to businesses. (Update 4/13/20: Loans top $1.6 billion approved so far for 7,500 businesses, 100,000 jobs)
The program stands to bring massive economic relief – 350 billion dollars nationwide – to small businesses, including here in Hawaii.
Local banks must handle the actual lending on behalf of the federal Small Business Administration. Each bank had to build their programs in an instant.
“The program started last Friday, and the final rules came out about 11 p.m. Thursday night. On Friday morning the dams broke. All the applications came flooding in, and it’s been a whirlwind since then,” said Rich Wacker, President and CEO of American Savings Bank.
So far, locals banks have been able to get thousands of applicants accepted by the SBA portal, with more going in every day.
That’s hundreds of millions of dollars worth of approved lending already, paying for tens of thousands of local jobs.
“Keeping people on payroll and out of the unemployment offices is so important. That’s going to help companies bounce back more quickly. It’s unprecedented these volumes of loans that the banks are trying to process. We have people working around the clock to move this,” said Wacker.
He explains how American Savings Bank, one of the state’s major local banks, is handling the scope of their payroll protection approvals in just a matter of days:”
“We’ve gotten about 2,000 applications in from companies across the state and across sectors. It really gives you a big insight into how broad the pain is in this situation now. It ranges across all sectors, all different size companies, and all across the islands.”
American Savings Bank already got green lights from the SBA portal for 1,700 companies so far. That’s 30,000 jobs and $270 million just from their bank.
“We give our business owners some hope. We’ve got a glimmer of light at the end. We can make it through the next 8 weeks, we can make it through the next quarter and give our employees the hope they’re going to be able to keep their jobs, and they’re able to work as we come out of the lock down and the shelter in place order,” said Wacker.
The loan amount general equal 2.5 months of a company’s payroll cost. Small businesses have until the end of June to spend it on paychecks to qualify for the loan to be converted into a grant from the SBA.
“The spirit of this is really to get support to small businesses, to be able to keep their people on payroll and keep them working, in some way shape or form, for each of the companies,” Wacker explained.
There’s no allocation by state or region nationally.
It is first come first serve to get a piece of the pie, before the SBA funding cap is reached.
While the application form is fairly quick and simple, companies do need to provide other backup, and banks are required to vet each applicant.
“The fastest way is to work with whichever institution is your primary bank. As we’re working through the process I believe most of us are opening up to take non-customers as well. But it is harder, and we’re really trying to focus on getting as much through as we can quickly, so that’s why you see the focus on existing customers,” said Wacker.