It’s all gone.
Less than two weeks after the federal government launched a $ 349 billion emergency loan program.
Only a fraction of America’s 30 million small businesses benefited from the program. However, data released by the SBA this week shows that small business owners in Minnesota fared better than their counterparts in most other states.
The emergency loans are part of two major aid programs designed to help small businesses cope with the aftermath of home-stay orders that rocked the coast-to-coast economy. The other program offers $ 1,000-10,000 grants for small businesses, but this $ 10 billion program has been plagued by delays and has reached its funding limit.
“The SBA cannot legally issue new loan approvals once the programs experience a loss of funds,” said US Treasury Secretary Steven Mnuchin and US Small Business Administration Administrator Jovita Carranza in a joint statement. “We are calling on Congress to allocate additional funding to the Paycheck Protection Program – a critical and largely bipartisan program – which will allow us to resume processing loan applications, issue credit numbers, and protect millions more paychecks.”
President Donald Trump has requested an additional $ 250 billion for the emergency loan program, but the proposal stalled amid party disputes. Republicans are pushing for swift approval while Democrats are calling for some of the additional funds to be used to help businesses that have no existing banking relationships, particularly women and minority-owned businesses.
Many small business owners have complained that large banks refused to accept their application for the program. A survey by the Star Tribune of the top 10 financial institutions found that most of them require applicants to have a business account by February 15. Some banks have refused to process requests when a customer had a business account with a competing lender.
Thousands of business owners were still waiting for their loan requests to be processed when funds dried up.
Mark Lindgren, who owns a company in Minnetonka that destroys confidential documents, applied for a $ 20,000 loan almost two weeks ago. On Thursday morning, he received an email from the US bank informing him that his application had been suspended indefinitely.
“We recognize that having uncertainty about much-needed funding for your business is frustrating,” the bank said in the email. “Even with thousands of employees working around the clock, we were unable to meet the overwhelming demand from our customers.”
US bank spokesman Evan Lapiska said Thursday the bank had funded more than 17,000 emergency loans. In a previous email, Lapiska said the bank had received more than 29,000 applications as of April 6.
Lindgren said he would have to make “hard decisions” by the middle of next week if he did not get the funds.
“It’s frustrating,” said Lindgren, noting that small businesses employ nearly half the workers in the US. “Put politics aside and get something done.”
House spokeswoman Nancy Pelosi said she was ready to support the president’s motion, but she wants $ 60 billion to be allocated to community development financial institutions, which are a major source of funding for women-owned and operated businesses Represent minorities.
Alfredo Martel, who heads one of those community groups in Minneapolis, said minority companies are largely excluded from the $ 349 billion funding cycle. He said his nonprofit, the Metropolitan Economic Development Association, has already loaned everything he can.
“Of course we don’t want to delay the process, because time is of the essence,” said Martel. “But we have to make sure that the second round of funding goes to those who were not served by the front row.”
Only 3.3% of the country’s small businesses have managed to obtain credit through the program, the SBA data shows. The program is available to businesses with 500 or fewer employees and businesses can borrow up to $ 10 million.
“The high demand we have seen underscores the need for hard-working Americans to have access to relief supplies as quickly as possible,” said Mnuchin and Carranza in their joint statement.
Minnesota companies outperformed most states. As of Monday, 33,819 small businesses in Minnesota received a total of $ 7.6 billion in forgivable loans, with an average loan size of $ 225,713, the data shows. The state took eighth place in terms of total prices. Overall, 6.5% of Minnesota small businesses got loans, nearly twice the national average.
Minnesota employs 1.3 million people in 520,110 small businesses. On an enterprise basis, Minnesota companies were awarded $ 14,676, the fifth highest rate in the country. Eight of the ten states that performed best for their small business populations are in the Midwest, including Wisconsin, Nebraska, and Iowa.
Rob Scott, the SBA’s regional administrator for Minnesota and five other Midwestern states, said Minnesota outperformed many other states because of the state’s strong banking presence as well as its significant manufacturing community.