Local business owner David Villec is pissed off. With the COVID-19-induced shutdown of many businesses, including his law office and his property management company in Eureka, money is dwindling fast. And while he was excited to hear about the Paycheck Protection Program, a federal program offering loans through the Small Business Administration, actually getting that relief money has proved to be a frustrating ordeal. 

Villec wanted to apply for those funds as soon as he heard about the program, but after making a few phone calls and getting some conflicting information, he learned that it would not be simple.

It turned out that his financial institution, Coast Central Credit Union, wasn’t eligible to administer the loans. (That has since changed, as you’ll read below.) He was annoyed, so he called them up.

“I said, ‘When were you going to tell me?’” Villec said in a phone conversation with the Outpost earlier today. He’d seen news reports suggesting that demand was so high that the program may run out of money. He worried that he was already too late, so he pressed the Coast Central employee for more information. “They said they were still working on it,” Villec recalled. “That’s when I said, ‘Fuck you.’ They hung up on me.”

The $349 billion PPP program, a key component of the federal government’s $2 trillion CARES Act, is designed to function more like a series of grants than loans. Each recipient’s debt will be entirely forgiven as long as they spend at least three quarters of the funds on payroll costs, with the balance available for such expenses as interest on mortgages, rent and utilities.

But the money is not available directly through the Small Business Administration. Instead, business owners must apply for approval through their regular bank or credit union.

The rollout of this program, by most accounts, has been a real shitshow, mired by technical glitches, unprecedented demand and confusing and inadequate guidance from the federal government. 

Through Thursday, 70 percent of small businesses in the country had applied for PPP loans, though most were still waiting for the money to arrive.

Leila Roberts, director of the North Coast Small Business Development Center, has seen the stress local business owners are experiencing. 

“To be honest, I don’t even know where to begin,” she said when asked to describe the situation. “You can imagine the volume and tenor of panicked calls we get every day.”

Villec experienced one of the many problems with the PPP rollout, Roberts explained. Banks that weren’t already pre-approved to administer what’s called 7(a) loans — the Small Business Administration’s primary financial assistance program — had a number of hoops to jump through if they wanted to help their customers acquire PPP funding. 

“That was true of two of the [four] local credit unions,” Roberts said — Eureka-based Coast Central Credit Union and Garberville-based Vocality Community Credit Union (formerly called Community Credit Union of Southern Humboldt). Both needed to submit applications to the federal government requesting permission to participate in the program. 

Roberts said there have been dozens if not hundreds of lenders nationwide trying to get their applications processed, and the turnaround time has not been quick.

Bob Moore, Coast Central’s chief credit officer, can attest to that. “As soon as the program was rolled out … we immediately made an application to become a PPP institution,” he said. With the credit union’s business members clamoring for financial relief, Coast Central officers checked in with the Small Business Administration daily, hoping for approval. Roberts said she and her colleagues reached out to their contacts in the SBA’s San Francisco office, and Congressman Jared Huffman’s office even got involved, applying pressure to move Coast Central’s application forward. 

Coast Central finally got word on Thursday that their application has been approved, meaning the credit union can start offering PPP loans to its business members. “We’re rolling this out next week,” Moore said. “We’re pretty excited.”

Moore said he sympathizes with Villec. “There’s a lot of people out there in need,” he said. “We understand his frustration. We get it.” But he said Coast Central employees have been upfront with everyone who’s called, telling business owners that the institution wasn’t yet SBA-approved and offering them other services, such as loan deferrals. 

Vocality CEO Pat Neighbors said her institution has yet to receive the SBA approval necessary to issue PPP loans. “We got notice last night that they’re working on our application,” she said. Asked if Vocality has a lot of business owners hoping to participate, she answered, “Many many many. They’re chomping at the bit.”

In the meantime, she said, Vocality is offering emergency loans and 90-day loan extensions for both consumers and small businesses.

Roberts said she’s been nearly overwhelmed by the surge in demand from local business owners struggling to survive this unexpected shut-down. She recalled being excited in January and February to see a spike in new client requests — about nine or ten of them per week. Since mid-March, however, the North Coast SBDC has been getting more like 50 applications each week, and Roberts is taken aback by the scope of this community-wide hardship. 

“I’m sitting on the couch last night, plowing my way through [the thick stack of applications], and the list isn’t shrinking. It’s like the Yellow Pages,” she said. “And I just start crying. It’s awful, awful. For everybody.”

[Note: After this story was published, Roberts followed up to say she was not taken aback but rather saddened by the scope of hardship, and to clarify that when she said it’s awful for everybody, she was referring to the small businesses that comprise the SBDC’s clientele.]

But she said there’s a number of other resources available beyond the PPP program. “What we are recommending to small business owners, if they have not yet applied for the SBA’s Economic Injury Disaster Loan program, they should definitely do that,” she said. 

The New York Times reports that that program has likewise been flooded by requests. It “has run low on funding and nearly frozen up entirely,” according to the report. But Roberts said people should apply anyway, and if they applied before April 1, they should apply again because the system has been improved. The EIDL program is intended to cover operating expenses, and Roberts said that if the money takes so long to arrive that an applicant no longer needs it for whatever reason, they can simply return the funds. But by applying, “at least you’re in the process,” she said.

The state, meanwhile, is working on its own disaster relief loan guarantee program, though it has yet to formally launch. The program is managed within iBank’s Small Business Finance Center but will be implemented through approved lenders called Financial Development Corporations. More information can be found here.

“What I am really delighted and impressed with is the proliferation of local resources for businesses,” she said. Specifically, she commended the City of Arcata for being the first local jurisdiction to launch an emergency bridge loan program. Del Norte County has since done the same. The Arcata Economic Development Corporation (AEDC) and Redwood Region Economic Development Commission (RREDC) are also offering loans for businesses in need of fast cash.

Any money borrowed through those local programs should be eligible for repayment with funds from the SBA’s Economic Injury Disaster Loan program — at least according to the rules released publicly, Roberts said.

Keeping track of the numerous programs and their respective rules is incredibly challenging even for financial industry professionals. Roberts said a group of such experts meets three times a week in Humboldt County, and even they are having a hard time staying up to date on changing rules and requirements in the federal stimulus.

“I can only imagine how our clients are struggling,” Roberts said. “I’m trying to be very careful that what we tell clients is true, but the reality is that what we tell people one day might be different the next day.”

In Washington, D.C., Congress has been haggling over the particulars of injecting another $250 billion into the PPP program. As of this writing, such a bill had yet to pass.

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Note: This story has been updated to expand and clarify information on the California Disaster Relief Loan Guarantee Program.