Coronavirus Relief Loans Receive Overwhelming Demand From Small Businesses

By Emel Akan
Emel Akan
Emel Akan
Emel Akan is a senior White House correspondent for The Epoch Times, where she covers the Biden administration. Prior to this role, she covered the economic policies of the Trump administration. Previously, she worked in the financial sector as an investment banker at JPMorgan. She graduated with a master’s degree in business administration from Georgetown University.
April 8, 2020Updated: April 14, 2020

WASHINGTON—Small businesses that had reported record-high optimism in recent years are now facing an unprecedented economic disruption caused by the pandemic. Fearing a cash crunch, business owners are flocking to their local banks to apply for coronavirus relief loans to stay afloat during the crisis.

Small businesses have applied for more than $40 billion in relief funds under the Paycheck Protection Program (PPP), President Donald Trump said during a White House press briefing on April 7.

The PPP loans provide an incentive for small businesses to keep their employees on the payroll. The businesses will be able to use that money to pay the wages, rent, mortgage interest, and utilities.

The loans, with a maturity of two years and an interest rate of 1 percent, are provided to businesses with fewer than 500 workers.

The U.S. Small Business Administration (SBA) stated it would fully forgive these loans, along with the interest if all workers are kept on the payroll for eight weeks. At least 75 percent of the forgiven amount should be used by businesses for payroll. Forgiveness is also based on maintaining salary levels. Hence, the employer can’t reduce the wages, the agency stated on its website.

Lenders began processing loan applications on April 3. The program will be available through June 30.

“We applied and were approved almost overnight at the small bank we use for our business,” Ryan Stewman, a small-business owner from Dallas, told The Epoch Times.

His company,, provides a marketing software solution and the demand for his business has increased with the pandemic.

“We never planned on laying off anyone, and the PPP loan was just the cherry on top that helped us know we made the right choice,” he said, adding that he applied for the loan to “have extra cash flow in case of emergency.”

Teodor Panterov, co-founder of the start-up BroadwayPass in New York City, which offers discounted tickets to shows, however, has been severely hit by the pandemic.

“All Broadway shows are closed. Our business was hit really bad. We basically have zero revenue and no business whatsoever,” Panterov told The Epoch Times.

He applied for a relief loan of $156,000 and received preliminary approval from his bank, Chase. He plans to use roughly 77 percent of the fund for payroll.

“The reason why I applied for PPP is that we have three brick-and-mortar locations in Times Square and 22 full-time employees,” he said. “I am not planning to lay off the employees as we have a really strong team, and I try to support them as much as I can.”

However, applying for the loan was “a truly difficult process,” he said as the lender’s website kept crashing.

High Demand Causes Delays

Some small-business owners have been frustrated by delays in getting these loans due to technical glitches and confusion. Some lenders also delayed the process, asking for more guidance from The Treasury Department and SBA.

“I know it can be frustrating for the borrowers because, obviously, there’s a lot of anxiety and fear right now,” Patrick Ryan, president and CEO of New Jersey-based First Bank, told The Epoch Times.

“But I think that’s to be expected when you’re talking about trying to pull together something of this magnitude in such a short period of time,” he said.

According to Ryan, the fundamental issue is the exceptionally high demand and lack of capacity to handle the flood of applications.

“If you look at how challenging and cumbersome a traditional SBA loan could be, it really is quite amazing what the SBA has done to try to streamline this process.”

Ryan said his bank received 500 applications and will be able to provide the funds within a few days.

“We’ve primarily been focused on trying to service demand from existing customers. If we get through that demand I think we will reallocate resources to try to help non-customers.”

Lisa Chu, owner of children’s formalwear website Black N Bianco, which is based in Los Angeles, has five employees and can only depend on the SBA’s loan to keep her business going.

“This pandemic has been a nightmare for my small business. Everything has been canceled, from weddings to Easter,” she told The Epoch Times.

“I was very excited to see the PPP loan being offered; however, that excitement was soon lost when I found out my business bank is not offering this loan.”

Chu started searching for other banks, but realized they are only accepting applications from existing customers.

“I am pretty much out of luck when it comes to a PPP loan, because almost all of the banks are prioritizing their own customers,” she said.

Because of high loan application volumes, most lenders are having hard time taking on new customers.

Trump told reporters on April 8 that he’s already raised this issue with large and community banks “and they are working on that.”

‘We Will Not Run Out of Money’

There are nearly 3,500 lenders on the PPP system with more banks signing up, according to Treasury Secretary Steven Mnuchin.

“I want to assure all small businesses out there, we will not run out of money,” Mnuchin said on April 8 in an interview with CNBC. “If you don’t get a loan this week, you’ll get a loan next week or the following week. The money will be there.”

The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law in March allocated nearly $350 billion to small businesses. At the time of writing, the administration was in talks with Congress to secure an additional $250 billion for the program.

The extra fund will help alleviate the concerns, says Tom Pretty, head of SBA lending at TD Bank. He believes that small businesses are under extreme pressure and are worried that they will be left out.

TD Bank opened up its PPP loan process on April 6 and received more than 35,000 applications in three days.

“There’s an overwhelming demand for the product. We’re getting inquiries from all our customers,” Pretty said. “Our initial estimate is that this could be anywhere from 50,000 customers to over 500,000 plus, that’s a big range.”

An earlier version of this article misstated the name of the small-business owner Ryan Stewman’s company, The Epoch Times regrets the error.