Small businesses in El Paso wait for payday loan funds after missing the cut
A look inside El Paso during the coronavirus and COVID-19 crisis
The city issued a “Stay at Home, Work Safe” order that went into effect at midnight Tuesday, leaving much of El Paso looking like a ghost town.
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El Paso store owner Armida Alvarez’s heart sank when she learned that the $ 349 billion federal forgivable loan program to help small businesses keep up with their wages for two months was strapped for cash last week.
When the Small Business Administration Paycheque Protection Program, or PPP, which opened on April 3, the owner of the Holy Spirit Christian bookstore and gift shop in East El Paso submitted an online loan application to Chase Bank, where his store has an account, did she declared. But the request was apparently never approved and submitted for funding, she said.
“It was so disappointing. My plans were to pay my staff (six people) because they are suffering, ”said Alvarez, 70, who has operated the small store for 23 years. She just started selling items through the store’s website, saintspiritep.net, in the hope of generating income. She plans to tap into her store’s cash reserve to pay them salaries, she said.
She hopes her store still has a chance to get a small loan if the payday loan program is paid off by Congress. Alvarez estimated her loan would likely be around $ 6,000, based on an SBA formula she had seen.
Nearly 1.7 million businesses have received payday loans from nearly 5,000 lenders nationwide, according to SBA data. Texas led the country with 134,737 loans worth $ 28.5 billion. However, California had a larger dollar amount at $ 33.4 billion for 112,967 loans.
The payday loan program was part of the $ 2.2 trillion federal stimulus package designed to help businesses, employees and others overcome business closures and other restrictions implemented to help stop the spread of the coronavirus.
Many El Paso lenders and government leaders expect Congress to put more money into the program in the coming days. Agreement between Congress and Trump administration reportedly close to add an additional $ 300 billion to the loan program.
U.S. Representative Veronica Escobar D-El Paso said she hoped Congress could approve additional credit for the payday loan program this week. But resistance from the Republican-controlled US Senate to certain solutions to funding problems, sought by House Democrats, is delaying things, she said in a brief telephone interview on Friday.
“With the deployment of the first batch of money, we were able to see a lot of issues that we (House Democrats) are trying to resolve in the future in all future disbursements,” Escobar said.
“One of the things we have heard from voters is, for example, that very small businesses that have no relationships with banks,” such as food trucks, “have had a real problem with access funding because they have spent a lot of time trying to find a bank to engage with them.
“We (House Democrats) are trying to free up money for credit unions and other small community lending institutions” with requirements that they provide loans to smaller businesses, Escobar said.
Most El Paso banks and other lenders are holding back loan applications that weren’t processed on time, and many continue to accept applications in anticipation of the program reopening.
El Paso banks’ loan volumes increase dramatically with PPP
The paycheck protection program had many El Paso banks and other lenders working overtime and lending volumes that typically take them months to reach.
WestStar Bank, a large chain of community banks in El Paso, processed 1,054 loans for $ 231 million, reported Rick Francis, CEO of WestStar. This amount is probably one of the highest totals in El Paso for the Paycheck Protection Program. However, the SBA does not report total loans by city or by lender.
“What we have dealt with is over a year of loans” in about two weeks, Francis said. “Unfortunately, 206 applications were still pending and did not receive an approval number” when the SBA shut down the program, Francis said.
The $ 231 million in loans helped preserve 33,109 jobs in the El Paso-Las Cruces area, Francis said.
The largest loan was $ 7.1 million for a restaurant operator with multiple locations and about 1,800 jobs, and the lowest was $ 1,500 for a sole proprietor, Francis reported.
Restaurant and hotel chains with less than 500 employees per location are eligible for PPP loans even though the company may have more than 500 employees in total, which is the employee limit under the loan program. , according to information from the SBA.
Westar and other lenders could end up making money on the loans from the loan fees and the small 1 percent interest charge on the loans. These would be paid by the SBA if most of the loans are canceled, which will happen if the companies meet all the requirements.
“We didn’t come in to make money,” Francis said. “It’s the right thing for the community to do. It’s free money for businesses, and it helps employees. I hope we make a profit, but that remains to be seen.”
United Bank of El Paso Del Norte, a small community bank in El Paso, processed 313 PPP loans for about $ 42 million, the dollar amount of loans it would make in about two years, said Monty Rogers, CEO of the bank.
The largest loan was $ 1.5 million and the smallest $ 3,500, he said.
The Western Heritage Bank, another small community bank, had about 230 loan applications and secured about $ 29.5 million in approved PPP loans, about half of the bank’s lending volume in a year, said Jim Volk, chairman of the bank’s holding company.
The largest loan was $ 2.5 million and the smallest about $ 7,000, Volk said.
GECU, El Paso’s largest credit union, has received around 500 applications, mostly from GECU member companies, a GECU official said. About $ 10 million in PPP loans were approved before the money ran out, the official said. GECU officials are asking members who have not applied to have everything they need ready to apply if the payroll program reopens.
LiftFund has over 800 apps waiting for more money
LiftFund, a San Antonio-based nonprofit lender, was only able to fund nine loans in Texas, none in El Paso, for $ 800,000 before the paycheck protection program ran out of money .
LiftFund received 819 PPP loan applications, including 28 in El Paso, for a requested amount of nearly $ 68 million. He still has access to most of the $ 25 million pledge he recently received from Goldman Sachs for PPP loans, said Janie Barrera, CEO of LIftFund.
He is now trying to prepare applications in his pipeline if the payday loan program opens again, Barrera said. It does not take new applications.
“It’s devastating for these small businesses” that haven’t received a loan, Barrera said. Many have no income or reduced income, she said. “The point is to keep people on the payroll. “
Volk of Western Heritage Bank said, “This is a worthwhile program. I think it will help. But 2.5 months payroll (for a business) won’t be enough if it lasts longer. “
Baseball Academy Owner Says P3 Loan Not Enough To Survive
Lisette Wyno-Brough, who with her husband, Christopher Brough, owns and operates El Paso Legends Baseball and Softball Academy, hopes the company will secure a $ 10,000 PPP loan through WestStar Bank.
The company operates 17 batting and pitching cages in a refurbished warehouse that opened in February in east-central El Paso. The company opened in July 2019 in a smaller location.
“We received a call from the bank stating that our loan application had been approved,” but Wyno-Brough was unable to contact WestStar bank representatives to determine if his loan was funded before the money does not run out, she said.
And while the money would help support El Paso Legends’ 13 mostly part-time employees for a while, he can only use 25% of the loan, or $ 2,000, to pay his rent, which is of $ 6,000 a month, said Wyno-Brough. .
“I’m not the only one sitting in the same boat. For a lot of small businesses our rent exceeds our payroll, ”and all of these businesses are wondering what to do next, she said.
And even when businesses reopen, Wyno-Brough wonders if his business can survive the likely continuing demands of social distancing.
“If we can’t use all of our batting cages, we’ll lose income,” she said. Filing for bankruptcy and closing the doors is an unfortunate possibility, she said.