Several Nevada banks say they are barely able to keep up with the flood of requests for the Paycheck Protection Program.
President Donald Trump gave the OK Friday for more than $300 billion in funding toward the program, which provides small businesses loans to pay for wages, benefits, rent and utilities and is eligible to be forgiven. The federal funding program, administered by the U.S. Small Business Administration, began taking applications April 3, but the first round of $349 billion in funding dried up in less than two weeks.
Urban Nest Realty owner David J. Tina said many of his colleagues are waiting to be funded.
“Most business owners (were) being told to wait it out,” he said. “I lucked out. I have a great relationship with a local bank and I was very proactive.”
Much of the criticism among small business owners and even independent contractors, who also qualify for the Paycheck Protection Program, or PPP, said it was difficult to find banks that didn’t require an applicant to have an existing business account, credit card or loan.
But local institutions like Lexicon Bank and Greater Nevada Credit Union have opened their doors to any applicant, at least for now since meeting demand has been manageable.
“We are accepting them on a first-come, first-serve basis (but) at some point, we may meet a restriction or some capacity where we can’t process those loans,” said Lexicon Bank Chief Executive John Miller, adding nearly all of its resources have been devoted to helping PPP applicants.
The bank has seen 144 loan applications approved by April 13 with roughly $42 million in funding expected to be dispersed this week.
Miller said it has helped small businesses request loans ranging from $6,000 to its largest amount of $1.3 million.
Greater Nevada Credit Union President and Chief Executive Wally Murray said 10 days after companies were allowed to apply it had processed 1,300 applications totaling about $160 million.
“We’ve had very very strong demand,” Murray said. “We made the decision from the inception of the program to accept applications from all businesses and independent contractors without exception as long as they met the federal guidelines.”
As of April 13, the credit union received authorization from the SBA to process over 350 loans for nearly $53 million.
GNCU, which operates 14 branches in northern Nevada, doesn’t require an applicant to be a member but in order to receive the funds they’ll have to establish an account, according to Murray.
He said banks do receive a small fee for processing the loans.
“It’s a percentage fee that actually goes down as the loans get larger so there’s not a lot of money in it from a financial institution perspective, but that’s the main carrot, the financial carrot, that the government is paying to get financial institutions to participate,” he said.
The stimulus bill states banks receive 5 percent for loans of under $350,000; 3 percent for loans between $350,000 to under $2 million and 1 percent for loans over $2 million.
“Quite frankly, it’s designed to get the money out there…and allow people to continue to be paid even while the businesses they work for aren’t taking in any revenue,” Murray said.