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Maine banks scramble to process new small business loans amid coronavirus, COVID-19 pandemic

Former SBA Acting Administrator says feds have given slow & contradictory guidance.

MAINE, USA — Maine banks have been swamped by applications for a new Small Business Administration loan program which is designed to let companies keep paying employees who are not working because of the coronavirus pandemic.

The loans would be forgiven if the business meets all requirements.
Jeanne Hulit was Acting Administrator for the SBA during the Obama administration and is now the president of Maine Community Bancorp.

She said the work for local banks has been complicated by the guidance from the U.S. Treasury Department.

"It has not only been slow in coming, it has been contradictory," Hulit told NEWS CENTER Maine. "This program is really, effectively from my perspective, a grant program being administered through the banks, which banks are not set up to do. So the vehicle that they are using is the SBA-7A program, which this bears no resemblance to. So treasury statements about the program and its intent are well-meaning, and what the small businesses need, but the actual delivery channels through the SBA 7A program and through the banks is not as efficient and seamless as the treasury department believes."

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Sen. Susan Collins tweeted Tuesday that the Administration agreed to her request for an additional $250 billion for the Paycheck Protection Program she co-authored.  

Earlier Tuesday, she tweeted saying she would urge Congress and the White House to increase the funding for the program. Hulit thinks that's a good idea.

She said, "Basically this is a wide-open program, the eligibility requirements for this program are very very broad. Much broader than the usual SBA 7-A lending, so the demand is enormous.

And I think you’re going to see the capacity used up. We are staying on top of this, we want to make sure all of our small businesses get their share of the allocation of the $349 billion, but with all of the large banks coming online to issue through this program, Those funds go very quickly."

Hulit urges businesses to get the necessary documentation to their lenders as quickly as possible.

That includes not just the application, but their demonstration of eligible payroll costs, and the documentation about what they plan to use the proceeds for.

She said, "When we get that, we can start the process of the application, and we’re turning it around within hours."

And she offers some perspective about the size of this new program. Hulit says the SBA typically delivers about $30 billion of 7-A loans a year.

"The first day they did $35 billion in one day. So the system is strained. We’re working very hard to make sure that we are partnering with our customers to get the information in quickly."

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