January 19, 2022

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Charlotte small businesses in limbo as stimulus loan program runs out of money

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After revenue at Cass Bradley’s photography business dried up, she spent weeks trying to find a lender that would accept her application for the federal government’s $350 billion small business loan fund.

Charlotte Metro Federal Credit Union, where she had an account, was sending customers through a third-party lending platform. Still, her accountant advised her that she would be more likely to get in the line for funding if she went directly to a big bank.

Every bank she turned to was only accepting existing customers. Finally, PayPal announced last week it would start offering the loans, and she was able to submit an application.

But on Thursday, the program ran out of money as businesses clamored to apply. Bradley’s application is still pending with PayPal.

The depletion of the relief funds has left Charlotte’s small businesses in the lurch as the coronavirus has already forced them to close and lay off or furlough many employees.

Meanwhile, Congress is gridlocked over negotiations to replenish the program, with Democrats arguing that any legislation should also include funds for state and local governments and for businesses that may have had trouble accessing the program initially.

But for those who missed out, or are uncertain of their application status, it’s another snag in what has been a frustrating and confusing process.

The politicians are telling us that this is going well,” said Michael Brawley, owner of Brawley’s Beverage. “The day this rolled out I saw the president on TV say there were some minor glitches, I got it worked out quickly. … And here I am almost two weeks later with nothing. Through no fault of my own.”

Michael Brawley, owner of Brawley’s Beverage, is one of thousands of business owners who have applied for a small business loan program, part of the federal stimulus package. He still doesn’t know if the government received his application in time before funds dried up.
Michael Brawley, owner of Brawley’s Beverage, is one of thousands of business owners who have applied for a small business loan program, part of the federal stimulus package. He still doesn’t know if the government received his application in time before funds dried up.

Has the program worked?

The Small Business Administration reported Friday that 39,520 businesses in North Carolina were approved for the Paycheck Protection Program, totaling $8 billion, before the funding ran out.

North Carolina was 16th in terms of the money lent out to small businesses, despite being the ninth largest state.

On a call with reporters Friday, Thomas Stith III, the SBA Director for North Carolina, said the agency approved 14 years worth of loans, compared to its normal volume, in the span of 14 days. He said it’s difficult to compare states in terms of the total loans given out because the number of eligible small businesses and lending institutions in each state varies.

“The amount of financial support our businesses received in a very short time period is to be commended,” he said.

Republicans are pushing to add an additional $250 billion to the program, but rejected the Democrats’ proposal to make changes to the aid and fund hospitals, food stamps and local and state governments.

“I have already heard from North Carolina business owners who are worried about the future of their company and employees now that the program has run out of funding,” Sen. Thom Tillis, R-N.C., said in a statement Friday.

In an email, U.S. Rep. Alma Adams, a Democrat whose district includes portions of Charlotte, also said she’s heard from constituents who are suffering and have been denied PPP assistance. But she said it’s critical that minority and women-owned businesses have access to the relief.

Small business owners say the political fights are delaying their much-needed help.

“It is frustrating that they’re able to get things passed for these industries that are too big to fail,” said Dan Wade, co-founder and head brewer at Wooden Robot Brewery. “But when it comes to small business owners, it seems like both sides of the aisle don’t seem to prioritize that we are taken care of.”

The Wooden Robot Brewery taproom. Co-owner and head brewer Dan Wade said the brewery has applied for a loan from the Small Business Administration and the bank has notified him that his application has been sent to the agency. But he’s worried it may not have been sent in before the program funding dried up.
The Wooden Robot Brewery taproom. Co-owner and head brewer Dan Wade said the brewery has applied for a loan from the Small Business Administration and the bank has notified him that his application has been sent to the agency. But he’s worried it may not have been sent in before the program funding dried up.

Wade tried to apply with Wells Fargo, but was unable to at first, because the bank reached a self-imposed cap of $10 billion in one weekend. The bank said if it lent any more, it would risk violating the asset cap federal regulators imposed on it as a result of its fake accounts scandal.

A few days later, the Federal Reserve allowed Wells Fargo to make the loans — but Wade said the delay set his business back. Wells Fargo said in a statement Thursday that it is continuing to process applications for when more funds for the program become available.

After Wells initially advised customers to look elsewhere, Wade created an account and submitted an application through PNC Bank.

Wade said he was notified within the last day or so that his application had been sent to the SBA —but he’s worried it may not have been sent in time. He needs the money to pay his staff of around 30, many of whom he’s had to lay off.

There was a little bit of optimism when Congress passed and the president signed the CARES Act that help was coming,” he said. “And then with each passing day, it seemed like the help was farther off.”

Bryan Meredith, owner of barbecue restaurant Queen City Q in uptown, said he’s relatively pleased with the program, although it was stressful at first. He received his money Thursday evening — about $167,000— and is writing a check to the 34 employees that were on his last payroll.

“I’m 60, and I’ve never seen the federal government work this fast before,” he said.

Who got the money?

N.C. SBA spokesman Gregory Grevelding said in an email that if the agency received an application from a qualified lender before mid-morning Thursday, it will be processed in the order it was received.

Still, some businesses whose applications have gone through don’t know whether the paperwork was sent in time.

Brawley said he received a notification Wednesday that his loan request had been sent to the SBA, but he’s waiting to see whether he will actually receive the check to be able to pay his employees.

The unknown is as bad as the frustration of searching mindlessly,” he said.

And news that major corporations received tens of millions in funding from the program enraged many small firms struggling to survive.

The owner of Ruth’s Chris Steak House, for example, received $20 million in government-subsidized loans. The funding was aimed for those businesses with fewer than 500 employees, but the stimulus bill allows restaurant and hotel chains to receive money regardless of size.

The federal government said Friday that nearly three-quarters of the loans have been for less than $150,000.

Cass Bradley, who runs BlueSky Photo Artists, applied for a small business loan with PayPal after searching for weeks. But before her application could be finalized, the funding for the small business stimulus program dried up.
Cass Bradley, who runs BlueSky Photo Artists, applied for a small business loan with PayPal after searching for weeks. But before her application could be finalized, the funding for the small business stimulus program dried up.

As for Bradley, In addition to her BlueSky Photo Artist photography business, she also runs an organization to support female entrepreneurs. She said just two of the hundred or-so members have received SBA funding.

“It was up to the people that we elected to put precautions in place to protect what I deem a true small business, which doesn’t necessarily mean somebody who’s bringing in billions of dollars of revenue,” she said. “You’ve got these really talented, resourceful business women that are now struggling. Its just hit me personally.”

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