Greg Hunnicutt has almost entirely shut down his Houston-based construction business. At his one remaining job site, he's being careful to minimize the risk of anyone being exposed to the coronavirus. So he keeps fewer workers on the job.
"My electrician is there now doing some work," he said. "It's just him and his helper. So what I'm trying to accomplish here is reducing how people interact."
With his income sharply reduced, Hunnicutt needs more funds, and fast. He reached out to NPR on Friday, when the Small Business Administration's coronavirus crisis lending program opened. At the time, he was having trouble getting through online to apply for an SBA loan through his bank, Wells Fargo. I asked him this week how it was going.
"Well, it's not," he said, laughing. He says he filled out a form on the bank's website over the weekend, but he hasn't heard back yet.
But he says he needs that money soon to keep his business alive.
"I paid my guys two weeks," he said. "Well, that was two weeks ago. Starting today, this week, they haven't been paid."
If the process doesn't move quickly, he said his business will be in serious trouble.
Business problems with banks
Hunnicutt is one of dozens of small business owners that contacted NPR, describing obstacles in applying for loans. The $350 billion SBA initiative, called the Paycheck Protection Program, is designed to keep workers at small companies on the payroll during the crisis.
The Trump administration had said it hoped the program could give some businesses immediate financial assistance. And administration officials have bragged that hundreds of millions of dollars were disbursed through banks on the first day.
Some small business owners, like Hunnicutt, are waiting to hear from their banks. Others have said they haven't been able to get through to their banks, due to crashing websites.
Several business owners cited restrictions from Bank of America as a major hurdle. On Friday, Bank of America said a deposit account with the bank was not enough to qualify for loans. Applicants would need loan or credit card accounts with the bank. That left out the many businesses without lending relationships with the bank and sparked an online backlash. Bank of America loosened its requirements over the weekend.
The SBA program reflects the difficulties of quickly setting up a massive new emergency lending effort, and running it through myriad banking institutions.
And it comes at a time when businesses desperately need money. A recent survey from the U.S. Chamber of Commerce found that one in four businesses say they are two months or less from closing permanently, and one in 10 say it's one month or less.
Bigger problems than banks
Small businesses' difficulties with the new program go beyond their banks, however. New rules written after Congress created the program are tripping up some businesses, according to Stephanie O'Rourk, a partner at accounting firm CohnReznick.
"The problem with the program is that it doesn't align with the reality of the situation that a lot of businesses are going through right now," she said.
For example, she says, the new rules now say that the loans must be paid back in two years instead of the 10 that the CARES Act says. In addition, Treasury added a rule saying three-quarters of the money must be used on payrolls in order for it to be forgiven.
For some businesses, non-payroll expenses are just too high to spend that much on employees.
Chelsea Altman, co-owner of five restaurants in New York City, says that rule will be bad for her and other businesses in high-cost cities.
"In New York state or New York City, your rent is very high," she said. "So there is a chance that even with this 75% going to labor and then the other 25% is supposed to go to your rent, there's times when that won't" cover the rent.
Some banks displeased
Many banks opened the program up only to their own customers. As NPR has reported, that worried some small business advocates because it threatens to leave out smaller, and particularly, minority-owned businesses.
Banks, meanwhile, had their reasons for wanting to limit their applications, according to Aaron Klein, policy director of the Center on Regulation and Markets at the Brookings Institution.
"The Treasury Department made a major unforced error, leaving anti-money laundering rules on autopilot," he said.
To lend money, banks have to go through a procedure called Know Your Customer to prevent money laundering. It can be a cumbersome process, Klein explained, and stands to be a serious impediment to an effort that seeks to get tens of billions out the door in a matter of days.
Other banks have voiced their own issues, including forms that changed overnight, unclear guidance from the government, and difficulty with the Small Business Administration website.
For now, at least one concern with the program is being answered: that the initial $349 billion appropriated for it is too small to meet business demand. On Tuesday, the Treasury said it was preparing to ask Congress to spend another $200 billion on the program. Senate Majority Leader Mitch McConnell said on Tuesday that he plans to work with Democrats and Treasury to put more money into the program.
ARI SHAPIRO, HOST:
Small businesses are fighting for survival. They're hoping for a lifeline in a new $350 billion rescue program, but they are frustrated over crashing websites and restrictions on who can apply. NPR's Danielle Kurtzleben reports.
DANIELLE KURTZLEBEN, BYLINE: Greg Hunnicutt has almost entirely shut down his construction business in Houston. At his one job site he has left, he's trying to keep his workers safe.
GREG HUNNICUTT: My plumber was in with his helper doing some work. No one else was there. He finished. My electrician is there now doing some work. It's just him and his helper. So I'm - what I'm trying to accomplish here is reducing how people interact.
KURTZLEBEN: When the new small business rescue program opened on Friday, Hunnicutt tried to apply online at his bank, Wells Fargo. He couldn't get through. I checked back in with him this week to see how it was going.
HUNNICUTT: Well, it's not.
KURTZLEBEN: Yesterday he hadn't heard back, and today he said the bank told him the application process hadn't started yet. His business needs the money.
HUNNICUTT: I paid my guys two weeks. Well, that was two weeks ago. I paid them for two weeks. Starting today, this week they haven't been paid. It's going to be difficult keeping people without some kind of relief since we really are not working, not making any money.
KURTZLEBEN: Administration officials have said that banks loaned out hundreds of millions of dollars on the program's first day, but Hunnicutt is one of dozens of small businesses that have reached out to NPR about difficulties in applying. Some, like him, are waiting to hear back. Others say crashing websites have stopped them from applying. At one point yesterday Chase had a note on its site asking businesses not to call. In addition, the program's structure may prove to be too restrictive, according to Stephanie O'Rourk, a partner at accounting firm CohnReznick. She spoke to NPR via Skype.
STEPHANIE O'ROURK: The problem is - with the program is that it doesn't align with the reality of the situation that a lot of businesses are going through right now.
KURTZLEBEN: For example, she says, three-quarters of the money must be used to pay workers in order for that portion of the loan to be forgiven. But for some businesses, nonpayroll expenses are so high that it could be hard to spend that much of the money on employees. Chelsea Altman is co-owner of five restaurants in New York City.
CHELSEA ALTMAN: So, like, in New York state or New York City, your rent is very high. So there is a chance that even with the 75% going to labor and then the other 25% is supposed to go to your rent, there's times when that won't make rent coverage.
KURTZLEBEN: All of this comes at a time when businesses are desperately in need of money. A recent survey from the U.S. Chamber of Commerce found that 1 in 4 businesses say they are two months or less from closing permanently, and 1 in 10 say it's one month. Washington knows the stakes are high. On Tuesday Treasury Secretary Steven Mnuchin said he was going to ask Congress for $250 billion more for small businesses. Hunnicutt also knows the stakes go beyond the survival of his construction company.
HUNNICUTT: My fear about all of this is all these systems are going to get overloaded. You know, I had a conference call with my employees. I said, file for unemployment now because Texas unemployment is going to be overwhelmed, you know? And so, like, do it now just to get in, you know? No one, you know, was ready for this.
KURTZLEBEN: He told NPR that he's now seeking out other banks to try to get the loans.
Danielle Kurtzleben, NPR News.
(SOUNDBITE OF KEV SHERIDAN'S "ALONE IN BERLIN") Transcript provided by NPR, Copyright NPR.