Fresno’s small businesses had a hard time getting COVID-19 loans. More help is coming
For small- business owners in Fresno and across the San Joaquin Valley who have been hammered by closure orders related to the coronavirus pandemic, the Paycheck Protection Program passed by Congress as part of a massive COVID-19 relief package sounded like just the thing to keep employees on the payroll and stay financially afloat.
But things are seldom as straightforward as they seem.
The first round of funding for the U.S. Small Business Administration program, passed in late March as part of the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, included about $349 billion for businesses to cover two months of payroll, benefits and rent, utilities or mortgage interest.
That money was gone in less than two weeks – including millions of dollars each to large businesses that could likely have managed without it, said Dennis Woods, president and CEO of Fresno-based United Security Bank. That, he added, had the effect of leaving thousands of small businesses with nothing.
A database made publicly available by The Washington Post reported that through May 6, almost 350 public companies nationwide – including 58 in California but none in the Valley – had received almost $1.2 billion from the Paycheck Protection Program with an average loan size of more than $3.4 million. The database was compiled from reports that companies filed with the U.S. Securities and Exchange Commission.
“It was first come, first served, and we saw so much greed, so many public companies getting a lot of money, and a lot of people that should not have gotten it are now giving that money back,” Woods added.
Woods said his bank was one of the few Valley-based community banks that was not already a preferred lender in SBA loan programs, “and we did not have a password into the SBA’s network” until the day the program ran out of money. Prior to that, United Security was directing its business customers to other banks.
“A lot of our bigger customers that are more sophisticated have multiple banking relationships, so some of them worked through those other banks and got some money,” Woods said.
For Mark Jackson, owner of Blue Dolphin Engineering in Fresno, having a relationship with his bank that goes back 20 years helped, even for his small business that employs seven people full time.
Jackson’s bank, California Bank & Trust, took a couple days to get the online process set up. But after that, applying and qualifying was simple for Jackson since the bank already had all of his financial information.
“When they released the first funds, it took a couple days before we could even apply,” he said. “That was a little frustrating because I knew the money was getting sucked up. But when the process did open up, it didn’t take too long to apply.”
The bank communicated with him frequently on his loan, Jackson said, and he was approved and received funding for a PPP loan within a few days.
At the other end of the spectrum are tiny businesses in the Valley that could not find other lenders to pick them up for a PPP loan. “They are the ones that (no other banks) would try to take from you,” Woods said. “Imagine a $3,000 loan at 1% interest. You’re going to go through the process of making that loan just to make $30? … People were desperate for help.”
‘Almost like the slot machine’
Liz Sanchez, owner of Casa de Tamales, applied through 17 banks to get approved and get funding through the second round of PPP loans. Valley Community Small Business Development Center provided her a list of lending institutions and banks, both locally and from outside the area, doing the loans.
She found it easier to apply online rather than chase down busy loan officers via phone. After missing the first round of funding, she made sure she had everything in order to apply quickly for the second round.
“It’s almost like when you go to the slot machine,” she said. “You don’t play one at a time. You play two or three at a time and see which one hits first.”
While the loan doesn’t cover all of her costs, “it’s been a huge lifeline,” she said. She’s been able to give a couple extra shifts to her employees.
California businesses received more than $33.4 billion from the first round of funding – almost 10% of the entire pot for the nation. That was distributed to almost 113,000 companies, representing an average loan amount of about $296,000.
Congress approved a second round of PPP funding in April. Through May 8, nearly $190 billion in loans were distributed, including almost $36 million to California companies. Many more businesses across the U.S. received loans this time around, including more than 376,000 in California. But the typical loans are much more modest – an indicator that more small businesses are able to get to the feed trough this time around. In California, the average loan amount is $95,000 – about one-third of the average from Round 1 of the PPP.
‘Saving some jobs’
“In the second phase, we were able to get about 200 of our customers into the process,” Woods said. United Security was able to line up about $25 million in PPP loans. While there are some large businesses participating – the average loan size for the bank is about $130,000 – there are plenty of small ones, too.
“We have so many loans at $3,000, $4,000, $5,000 to cover their payroll for two months, so these are tiny businesses,” Woods said. “We’re not going to make any money from these loans, there’s no possible economic benefit except now these people don’t have to draw unemployment.”
“We’re in a unique position, because many of our branches are in towns where maybe we’re the only bank in the community, so we’ve got to get in the fight,” Woods said. “These dollars we’re talking about get spent through the community at least three times over.”
At Fresno First Bank, identified by Fresno District SBA Director Dawn Golik as one of the leading SBA lenders among Valley-based community banks, about 650 businesses have received a total of $187 million in PPP loans – an average of about $285,000.
More than half of the loans secured under the first and second PPP rounds at Fresno First, however, are for $100,000 or less. “We’ve got quite a few small loans, and we’re very proud of that,” said Amber Dorland, Fresno First’s head of SBA and government-guaranteed lending. “That’s our focus. We’re trying to keep our eye on the prize every time we enter the SBA system, that we’re saving some jobs and providing funds for rent and utilities for small businesses.”
It’s not just the big national banks and local community banks that are helping customers get the federal loans. Some out-of-region banks have helped pick up the slack that Woods described for small customers that don’t have established banking relationships.
Oregon-based Umpqua Bank has processed about $9.5 million in PPP loans to about 65 businesses in the central San Joaquin Valley, accounting for payroll for about 1,100 jobs, said Kurt Heath, the bank’s external communications manager. Those include about $6 million to more than 50 businesses and 700 jobs in Fresno County, Heath added.
This story was originally published May 15, 2020 at 2:21 PM.
