The federal government’s Paycheck Protection Program launched on April 3. Less than two weeks later, the U.S. Small Business Administration (SBA) announced the $350 billion Congress provided for the program was gone.
In between, small business owners were watching for updates about the funding left in the program, and looking for signs that they would get a loan.
With the CARES Act-created program offering a loan that could cover 2.5 times monthly payroll, and the prospect of being forgiven if business owners stuck to the terms, it offered essentially offered two months of key expenses through a time when the economy has slowed down as COVID-19 spread and social distancing orders were enacted.
By April 16, four out of the five entrepreneurs Technical.ly talked to on April 3 had a signal that they would be receiving loans. We checked in to learn more about how the process unfolded before funding ran out.
Severna Park-based website design and mobile application development agency Accella was among those who were ready with their application when the program opened on Friday the 3rd. After initially needing to resubmit, CEO Jason King said there wasn’t much communication during the week of April 6. But a promising sign came Friday, when Shore United Bank said Accella had gotten an SBA number, which King took as a key sign that the company was getting loan. By the next Friday, he had dropped off the signed documents.
“They told us the period of tracking expenses for forgiveness will start the day that the money hits our account for 60 days,” King said.
Thursday morning’s announcement that funding was out came as some business owners were still in the process of applying. But by that afternoon it was apparent that the status was changing quickly.
Around 3 p.m. Thursday, CEO Nic China said Morrell Park-based photobooth and software company Pixilated was seeing progress on its loan application, but had yet to close. A little over an hour later, he got word that the company was approved to be included in the round of funding.
And even as the company received approval, there was at least some continued cause for uncertainty as money had yet to hit the account.
Also on Thursday, Spark Baltimore-based Infinite Biomedical Technologies was still “in limbo,” CEO Rahul Kaliki said. But by the next day, the company that builds machine learning algorithms to control assistive prosthetic hands had received a promissory note — a sign that it will be receiving funds.
“We’re excited as this will really help us out,” he said. “We are now waiting for when the money will be transferred to our account but at least we know it’s coming.”
Canton-based software development consultancy SmartLogic’s leadership was “93% sure” that they got the loan after submitting an application 15 minutes after their bank’s portal opened on Monday, April 6, said the agency’s president, Yair Flicker. After a week of emails encouraging him to “hang in there,” he was relieved to get a message Wednesday night that said the loan was approved.
“I’ll withhold the 7% until I see the money hit the bank but I’m feeling pretty confident about it right now,” he said.
Kapowza didn’t hear back about its application, indicating the Canton-based creative agency startup is not in line for a loan this round. But time may not be the only factor, as President Dan Schepleng said they were applying with an eye toward need that may come in the future if the slowdown drags on.
“I don’t think we were high up on the list, because our numbers looked pretty solid,” Schepleng said. “Which I totally understand. There’s people that need it way more right now. I’m putting more faith in traditional methods like extending our line of credit.”
[Editor’s note: Schepleng told Technical.ly on Tuesday morning that Kapowza had indeed been approved for PPP funding.]
As we heard at a virtual forum featuring two U.S. senators on Friday, not everyone who applied received loans from a program that was first-come, first-serve, and opened applications for self-employed folks a week after other businesses. But this might not be the end of the funding, as Congress is working to appropriate more money: As of Monday morning, a bill being proposed had $300 billion in additional funding for the PPP.
As of Thursday, SBA data showed that 26,068 loans were approved in Maryland for a total of $6.5 billion. Several banks serving Baltimore businesses also ran their own numbers.
A sizable portion of that total came from M&T Bank, which approved loans for 6,660 businesses to the tune of $1.3 billion, according to Senior Public Relations Manager Scott Graham. The bank calculates that it will help the businesses keep 127,422 on their payrolls, and 45% of the loans were for $50,000 or less. For the mid-Atlantic and Northeast, the bank received a total of 30,000 applications, and 96% were approved.
The bank was already a prime SBA lender in the region, but, in a sign of how much the program grew the agency’s footprint, consider that it processed about 1,500 SBA loans last year, Graham said.
After telling us on April 3 that it received final regulations just hours before the program started, Baltimore-based Howard Bank processed 797 loans for a total of $185 million. Chairman and CEO Mary Ann Scully said the effort from the bank’s staff has been “extraordinary.”
“This has been an intensely personal process for us given our exclusive focus on Greater Baltimore small and medium sized businesses,” Scully said. “It has required policy amendments but those have been easy to accomplish given our local headquarters.”