Local Banks Are Not Serving Small Businesses

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By Joan Oliver

The federal government announced funding for small businesses last week as part of the CARES Act (Coronavirus Aid, Relief, and Economic Security).

The biggest aid is the Paycheck Protection Program (PPP) where the government will grant funding for small businesses to keep their employees on the payroll and the loan will be forgiven if it's used for those purposes. Small businesses were encouraged to go to their lender, or bank, and apply starting Friday, April 3. Well, the majority, if not all, small businesses did apply and now their bank is turning them away.

My niece owns a small business in Santa Barbara County. She went to her small, local bank and was turned away because they received "too many applications." On the same day the application period opened, this bank closed down its application period. It's unclear when they closed it but my niece tried to apply before noon, so somewhere within 4 hours.

This bank, the one that has numerous commercials touting how involved they are in helping small local businesses, is now turning their own customers away without any help. The only offer was to check with other banks. My niece called every bank in town and they are only accepting loans from their own customers that opened business accounts before February 15. 

I understand this has put a lot of stress on banks and based on the low interest and forgiveness, they won't be making any money off the loan, but what else are local business owners supposed to do? They can't go to another lender, they're stuck with their bank who is refusing to help them. The banks should accept an application from every single one of their business customers and then determine who qualifies and who doesn't. Turning their own customers away will result in more financial hardships for our local residents and small business community that was already suffering. 

Now is the time to help, just like the banks say they do in their promotional videos and press releases.


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Lucky 777 Apr 11, 2020 04:28 PM
Local Banks Are Not Serving Small Businesses

I own a small business closed by government decree. I jumped on this PPP as soon as I heard about it. I filled out what I thought was an application online with Wells Fargo, and would have cross-applied at other institutions but they all indicate they will only work with people who have accounts with them. As of 4/10/20 this is the email I got from Wells Fargo: "While you remain in queue based upon when you submitted your initial interest, due to high demand we are not able to begin your application at this time. All applications for the Paycheck Protection Program will be online only. We will continue to send you email updates frequently so you are informed on the status of your request to apply for the PPP through Wells Fargo. If you can apply through Wells Fargo, we will email you a link to start the application process. We are working through the queue in the order in which customers submitted their initial interest. Our branch and call center teams aren't able to answer any questions about this status."

a-1590544784 Apr 11, 2020 12:53 PM
Local Banks Are Not Serving Small Businesses

I'm a MB&T client and had this exact same issue. Wasn't fast enough for the first hour of PPP loan and was told by MB&T "sorry, try Union Bank." No other bank was offering anything else to non-clients. I continued to reach out to different contacts at MB&T and was told PPP loans are closed, nothing we can do for you, it "might" open back up again but can't guarantee that. It's been a very frustrating and stressful week of assuming I'd have to totally let go all of my staff. I check MB&T website just now and they've apparently reopened their PPP application period starting Monday. Wow, that's great, but why not send a mass email to all business clients or reach out to those customers who have been begging to be on a wait list? Poor handling all around.

a-1590544784 Apr 11, 2020 08:32 AM
Local Banks Are Not Serving Small Businesses

Here's a story in the NYTimes, for example, today, of an African-American woman who has a Capitol One credit card, the only one she could get at the time, awhile ago. Now, today, she goes to BofA and tries to get her emergency loan. But they won't touch her because she has the old Cap One credit card. Cap One is not yet dealing with emergency loans at all. So she's locked out of the emergency loan system. Somebody in the federal government needs to be smoothing the way/slapping hands, so this sort of thing goes away, banks behaving badly. This sort of thing is not what was intended.

SantaBarbaraObserver Apr 11, 2020 09:14 AM
Local Banks Are Not Serving Small Businesses

The Federal Government does not work for the people silly. They work for the money, the really big money. Duh.-------------------------------------------------- If you vote for the GOP, this is exactly what you voted for. Remember, these are people who hate government, who voted for people who hate government (ironically, to run government... ) and they, through sheer will, pure incompetence and willful ignorance, undercut government and destroyed 100 years of safety nets and security. Its pretty simple. -------------------------------------------------------------- America = where the super rich convinced the uneducated and poor that they're just like them, just not rich, yet! Trump suckers are a special kind of sucker. While its sad to watch this play out, the people got what they deserve. If you dont vote, you get the worst possible outcome. Vote, its really not that hard...

a-1590544784 Apr 11, 2020 08:19 AM
Local Banks Are Not Serving Small Businesses

Fatal bottleneck in the whole system. This was supposed to be a rescue system assisted by institutions that were in place and could facilitate EASY paperwork, like banks --- but the structure and instructions and money has not come down properly and now I think we're.... screwed.

RHS Apr 10, 2020 07:12 PM
Local Banks Are Not Serving Small Businesses

This is the nature of the American free enterprise system since Bill Clinton and his cronies, working in conspiracy with the Wall Street banks, coopted it. When we allowed banks to venture into the speculative market for their own profits and "deregulated" them from accountability to the people, they have just pushed further into the pig slop. The big banks are being prioritized by the FED and the Treasury Department. Wells Fargo, the most corrupt bank of recent decades got billions which it immediately handed out to its biggest customers leaving the Small Businesses in limbo. This is what happened the last time (remember TARP). Greed will never be sated. All we can hope for is a Monty Python moment with gluttony explodes on itself.

Big mack Apr 10, 2020 09:29 PM
Local Banks Are Not Serving Small Businesses

Your right . Wells Fart - Go is the worse most corrupt Banking institution in the World . I never could understand how they can still be in business .Ripping people off, even their customers i guess .

Get over it Apr 10, 2020 06:38 PM
Local Banks Are Not Serving Small Businesses

It's an overload of applications with not enough funding. Unfortunately, politics, as with the bill that funded this, are getting in the way. I just don't understand how funding this isn't more important than adding other nonrelated stuff to it. I know it's our political system... The whole we'll only pass a much-needed bill if we can add all this random partisan stuff to it crap pisses me off. This time is not as bad as the last bill or most, but still frustrating. Just get it done and if your needed funding is worthy, pass it on its own measure.

w scott Apr 10, 2020 06:09 PM
Local Banks Are Not Serving Small Businesses

with another perspective, Bank of Montecito accepted the application from the non-profit I helped last Friday, I spent about 40 minutes on hold to ask them exactly forms were required, and then with the correct forms, (Quarterly Fed Tax Returns) that showed payroll, that I attached, the application was accepted, I don't think they know when it will be processed yet,

a-1590544784 Apr 10, 2020 03:12 PM
Local Banks Are Not Serving Small Businesses

I run a nonprofit agency, we applied on Saturday through one of the banks we do business with, Wells Fargo. Somehow the initial enrollment was lost by their system and on Monday we tried and they were not taking any more applications. We then applied on Monday through our other bank, Bank of America, and it went right through and we were able to complete the first application and received acknowledgement of acceptance late than night.

LCP112233 Apr 10, 2020 02:39 PM
Local Banks Are Not Serving Small Businesses

Keep in mind that business have to apply for the loan. Doesn't mean they will get the loan. If a business is just about going under at the time of Covid closings, they would likely not qualify for a loan in the first place. Keep trying for your business sake, possibly some funding will be freed up due to others not being able to qualify.

a-1590544784 Apr 10, 2020 02:23 PM
Local Banks Are Not Serving Small Businesses

This is hard on everyone, and every business. Sadly, the reality is many businesses may not survive this. Hopefully the banks don' fold either.

tinker1 Apr 10, 2020 01:51 PM
Local Banks Are Not Serving Small Businesses

There is more to this story. The government announced the Cares Act several days before they gave the parameters to the banks. The banks got slammed with applications. Even today the banks haven’t been given rules. Most local bankers worked all last weekend and will this weekend (including me). SBA loans are specialized so there are limited amounts of staff that can process these loans.

wheezy Apr 10, 2020 01:29 PM
Local Banks Are Not Serving Small Businesses

I spoke with someone at Montecito Band and Trust on Monday and she told me to apply today, Friday, for a forgivable small business loan. I called again on Wednesday and spoke with a very nice man who said they in fact, were not accepting applications on Friday because the monies had already been allocated for larger businesses. He was unsure if there would be more money coming in for a small business. I have been a long time client of theirs and he did say that if there was more coming in they did want to work with people that already had accounts with them.

midair Apr 10, 2020 12:53 PM
Local Banks Are Not Serving Small Businesses

Why don't you name the bank? If they truly did these things then the public pressure may cause them to do better. But if you don't your story is unfounded.

a-1590544784 Apr 10, 2020 11:37 AM
Local Banks Are Not Serving Small Businesses

That's rough, try to take some solace in the fact that her application would not have been reviewed anytime soon by the bank anyway even if they did let her apply avger the 4 hour mark. Unfortunately this is a good lesson of "early bird gets the worm" - there are a ton of birds and not many worms right now. Have your niece call the bank again and ask if they plan on opening applications again once they finish processing the batch they accepted.

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