When the COVID-19 crisis first arrived on the Central Coast, SESLOC Federal Credit Union
worked with the U.S. Small Business Administration (SBA) to fast-track an application to become a certified SBA lender, so it could help provide low- to no-interest SBA loans to struggling local businesses.
But SESLOC has yet to approve a single loan, since the $349 billion that Congress appropriated for two emergency programs is already gone.
FILE PHOTO BY STEVE E. MILLER
OUT OF MONEY Two emergency loan programs funded by the COVID-19 federal stimulus bill—which were designed to help small businesses survive the COVID-19 crisis—are already depleted.
The SBA announced on April 16 that all of the funds
for the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) have been used up—not even three weeks after President Donald Trump signed the $2 trillion stimulus bill on March 27.
The loan programs need new congressional legislation to start up again. Until that time, SESLOC has a growing waitlist of small businesses in need.
“We originally created a waitlist on our website and allowed members to contact us,” said Kara Clark, SESLOC’s marketing manager. “That waitlist still exists.”
The quick depletion of the SBA loan funds underscores the scope and scale of COVID-19’s impact on small businesses nationwide, said Jim Dantona, CEO of the SLO Chamber of Commerce.
“Obviously, we were caught by surprise that it was done already,” Dantona told New Times
on April 16. “You think $350 billion could go pretty far, but when you think about the scope of how much money needs to go over this entire nation, you can see why it goes so fast.”
Many Central Coast companies are in desperate need of the loans—the EIDL is a very low interest loan, with an advance of up to $10,000, and the PPP is a forgivable loan to cover payroll costs during the pandemic. But Dantona thinks only a small number of local business owners have successfully completed the process to date. Many have found it frustrating and difficult to navigate, he said.
“It is not a majority, or even a large portion,” he said. “We were planning a survey for Monday [April 20] to ask our businesses, ‘how many of you applied, how many are approved, and how many received money?’”
The SBA loans are administered through banks, at regional lenders like American Riviera Bank, SESLOC, and Pacific Western Bank, or national banks like Union, Chase, and Bank of America. Dantona said Bank of America by itself reported having approved nearly 100,000 SBA loans around the country totaling more than $40 billion.
“We need more,” he said. “We need to keep doing this if we’re going to have an economy that survives this crisis.”
Judy Mahan, the incubator director at the Cal Poly HotHouse and director of the Small Business Development Center at Cal Poly, said during an April 16 webinar
hosted by the SLO Chamber that she’s “fairly certain” Congress will continue to fund the programs.
“This is just a program that has been put on pause,” Mahan said. “We’re recommending that companies continue to prepare for these loans. … Don’t waste any time fumbling to gather your documents.”
U.S. Rep. Salud Carbajal (D-Santa Barbara) issued a statement on April 16 calling on Congress to “immediately appropriate” $250 billion for the SBA loan programs. With Democrats and Republicans gridlocked over the details of a new bill, Carjabal’s statement echoed the Democratic position of including $100 billion to assist hospitals and health care workers.
“These priorities go hand-in-hand—we can do both at once,” Carbajal’s statement said. “This is a pandemic and we cannot waste any more time on partisan politics.” ∆