WASHINGTON — The roll out of the $350 billion small business loan program approved by Congress got off to a rocky start Friday, as thousands of business owners attempted to apply for desperately needed assistance with varying degrees of success.
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Aaron and Karen Scheeley are trying to figure out what’s next after they were forced to close their business, Kids Zone Academy in St. Petersburg, a week ago.
“We’re not getting the help the government promised,” said Aaron Scheeley.
The couple has been eager to apply for the massive small-business rescue program approved by Congress but they were denied assistance from multiple banks on the first day of the program’s launch.
“With Bank of America, unless you have a business loan with them or a credit card with them, they will not help you throughout the whole situation,” Karen Scheeley explained.
The Scheeleys have an existing banking relationship with the Bank of America, but they have not ever applied for a small business loan with the bank. They also attempted to apply for the loans with smaller, less established banks, but they didn’t have any luck.
“Unfortunately, with the smaller banks you need to have a pre-existing account with them,” Aaron said.
Some small business owners like Roberto Torres, who owns Blind Tiger Cafe are having a different experience.
“The application process was simple, we downloaded a PDF and filled it out,” Torres explained.
Torres’ application was approved by Valley National Bank, which he has worked with in the past.
“We actually have an SBA loan with them already,” Torres said.
Sen. Marco Rubio (R-Florida), chairman of the Senate Small Business Committee, said he anticipated it would be easier for small business owners to receive loans from banks where they already had an existing relationship.
“Yeah, and we expected that,” he said. “But we recognize that there are so many people that need this help, that we are going to have to attract new lenders to be able to participate in this,” he added.
Many banks and lenders have been scrambling to prepare for the overwhelming demand for loans while awaiting guidance from the government. Rubio is calling on larger banks like Bank of America to stop prioritizing existing customers.
“That’s a requirement that Bank of America created and I don’t know why," Rubio explained. "There is no risk in the banks for this. We’re paying them to do it, we’re calling on them to change that."
When businesses will get their cash once loans are approved is still unclear. However, time is running out, especially for those who are having trouble getting approved for the loans.
“If this continues longer, we have to file for bankruptcy, I don’t know what else to say,” Karen said.
Already $1 billion dollars in loans were disbursed on Friday. Rubio said he worries the funds could dry up more quickly than Congress anticipated.
“I do think that depending on level of utilization, there is reason to be concerned,” Rubio said. “I think if we can get the program to work well, regulators and banks get it to work well, this can be the kind of program, because of how much support it has, that Congress, even if we are not in session, through a unanimous vote in the House and Senate, get additional monies put into it.”