Business owner Kevin Berthelot began applying immediately two weeks ago for help from a federal paycheck protection program so he could rehire 25 employees let go because of the coronavirus pandemic.
With that $349 billion already exhausted as of Thursday, Berthelot and thousands of small business owners in Louisiana and across the country are left hoping for congressional action on a $250 billion add-on to the Paycheck Protection Program to help them survive.
More than $3.7 billion of federal paycheck protection program loans have been approved in Louisiana.
The program administered by the Small Business Administration through participating banks is a centerpiece of last month’s $2.3 trillion massive rescue bill for individuals and businesses. The program gives grants and loans to businesses with fewer than 500 workers so that they can maintain payroll and pay rent while shutting down their businesses during social distancing edicts to help contain the spread of the virus.
Lawmakers have been haggling over whether to extend the program as it stands now, or whether to add other provisions. It’s unclear when they might reach an agreement that would allow loan approvals to continue.
"We have very little cash left. I was hoping that with the PPP, I could at least get my employees back to work," said Berthelot, who runs Southern Style OffRoad, an automotive accessories store and manufacturing operation in Baton Rouge.
His regional bank accepted his application, which didn't get submitted to the SBA until Wednesday afternoon, just a day before the program ran out of cash.
"I tried to follow all the rules, but it's like a slap in the face," Berthelot said.
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Now he's not so sure that his business will survive without federal help. Berthelot was on pace to increase sales by 20% compared to last year several weeks before the coronavirus pandemic began spreading in Louisiana. Now sales are down 30% over the year and continue to drop. Some days he sees only about $100 in sales.
He did receive about $10,000 from the SBA through a disaster loan program, but it's not enough. He's looking for at least $1 million through the paycheck protection program to get the company back on track.
"The demand for the program has been really strong," said Mark Marionneaux, CEO of the Bank of Zachary.
High demand nationally also meant delays, sluggish systems and frustrated business owners. "The system was just overloaded with people," Marionneaux said.
Now that the money has run out, a few applications that missed the cut off are being held until the next round, he said.
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"We're very hopeful it will be approved because the requests keep coming in. Preparation is key, get your stuff together because the next wave of money is going to go just as fast as this one did," he said.
Jude Melville, CEO of B1 Bank., is most concerned about independent contractors, who weren't allowed to begin submitting applications until several days after business owners with employees.
"I think it was the self-employed and contractors who didn't have as much of a chance to get in line," Melville said.
In Louisiana, more than $3.7 billion in loans from more than 17,000 applicants were approved as of Monday, SBA officials said.
Baton Rouge-based B1 Bank has processed about 1,100 applications so far and submitted about $270 million in loans.
"I think we'll probably end up with a couple hundred more (applications)," Melville said.
The Bank of Zachary submitted 140 loans, which totaled $18 million. About half of the funds have been approved and released to businesses. The average paycheck protection program loans at the bank is $127,000 and about 50% of the loans are for less than $50,000.
"We knew that the money would run short and our goal was to take as many applications as possible, we almost stopped everything to focus on this," said Blake Chatelain, CEO of Red River Bank.
Red River Bank saw about 1,400 applications from business owners across the state.
"We had gotten about 90% of our applications approved before they cut it off," he said.
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Nationwide, more than 1.6 million loans were approved before the $349 billion in funding ran out. About 70% of all loans were for $150,000 or less and the average loan size is $239,152, according to the SBA.
Lawmakers struggled Thursday to break a stalemate over President Donald Trump’s $250 billion emergency request for the small-business program.
The Capitol is largely shuttered, requiring consensus from all sides for any legislation to pass, and top GOP leaders are vowing to stick closely to Trump’s request despite Democrats' additional demands.
Democrats want money for hospitals burdened under COVID-19 caseloads and additional funding for states and local governments straining as the economy slides into recession. They also want to make sure the Paycheck Protection Program is opened up more to businesses that don’t have established relationships with banks that have been accepting applications for rescue funding.
A Senate session quickly adjourned without any progress, though staff aides to House and Senate Democrats and Treasury Secretary Steven Mnuchin convened another conference.
GOP aides said that Mnuchin is prepared to accept additional funding sought by Democrats for hospitals, but that additional aid to state and local governments couldn't get approval in the current round. The aides spoke on condition of anonymity to characterize internal party deliberations.
The Senate is away from Washington through May 4, but it convenes twice each week for pro forma sessions that could be used to pass more coronavirus aid — though only if no senator objects. The next Senate pro forma is Monday afternoon; no action is expected at a brief Friday House session.
The Associated Press contributed to this report.