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More than $1 billion in loans to small businesses across West Virginia has been approved, according to the U.S. Small Business Administration.

Through the recent coronavirus relief bill, called the CARES Act, Congress set aside $350 billion in forgivable loans as an incentive for small businesses to keep employees on payroll for the emergency period.

As of Tuesday morning, $1,054,712,000 in loans was approved for 5,211 small businesses in the Mountain State through the Payroll Protection Program — an average of $202,401 for each employer, according to the SBA. Nationally, $254 billion has been approved for 1.1 million small businesses.

Once a business is approved for a loan, lenders have exactly 10 days to send them out.

Fifty-five banks and credit unions in West Virginia have worked with small businesses to secure these loans, said Steve Bulger, the SBA’s Mid-Atlantic regional administrator.

“If you look at West Virginia specifically, to have 55 different banks and credit unions, really across the whole state, offering these loans, is a pretty good sign that the program is working — at least in West Virginia,” Bulger said by phone.

But some in Congress have asked who the Paycheck Protection Program is actually working for. Sen. Joe Manchin, D-W.Va., joined other Democrats in asking that half of the next round of funding for the program be set aside specifically for rural businesses and community banks.

Manchin said larger employers — the program allows businesses with fewer than 500 employees to apply — are gobbling up these loans before small rural businesses can get to them.

Sen. Shelley Moore Capito, R-W.Va., sided with congressional Republicans, saying the Paycheck Protection Program is working — it just needs more funding. Both parties are asking for another $250 billion to put into the program.

Bulger said the divide between small and large businesses is a little complicated but that the problem often lies with the size of the banks.

“The regular SBA lenders, the bigger banks, they already know what they’re doing in a lot of ways, so they were able to jump on it a little quicker,” he said. “You look at, like, a Bank of America, they have hundreds of thousands of applications, right? But they probably have a staff of 10,000 or 20,000 people working on it.

“You get a small community bank, if they have to process 250 or 300 loans in a week, that’s a gigantic undertaking for them. So our focus has been to educate and work with the real small lenders so they can offer it to their small businesses coming in.”

Brad Ritchie, president of Summit Community Bank, said that, as of Tuesday, more than 200 loans for small businesses have been approved. The bank has 37 locations in West Virginia and Virginia.

Ritchie said that, initially, “the program was changing, not daily, but hourly,” as Congress intentionally left the act vague.

Summit’s first roadblock was not having the updated software needed to process the loans. The next, Ritchie said, was avoiding legal obstacles stemming from the program’s vagueness.

If a small business spends at least 75 percent of the loan on employees’ salaries and non-cash benefits — health insurance, family leave, retirement — the loan will be fully forgiven. The SBA will reimburse the banks for the loans, but Ritchie said that, initially, this process was unclear.

“We just didn’t know the rules. We didn’t know how the guarantee worked — to be quite honest, there’s still questions on how the guarantee works,” he said. “The banks have been asked to close and fund these loans as a leap of faith from the Treasury Department and the Small Business Administration that the guarantee will be in place. They’re still writing those rules and [regulations] as we’re closing the loans.”

But the program as a whole has been successful in Ritchie’s eyes. He said Summit’s commercial lending staff has worked on nothing else but this program for the past three weeks.

“I think it’s been a good program. I don’t think it’s been perfect, there’s things I really don’t like about it ... but there was no other way for them to get this amount of funds out into the economy with the existing banking infrastructure,” Ritchie said. “We have over 200 loans approved by the SBA; our lenders are closing those and putting money on the street now, and we do have numerous loans closed where the borrowers have access to the funds.”

For small businesses still struggling to find a lender, Bulger said, some online-only lenders have been given the green light this week to offer loans through the program, which could be helpful for those who are self-employed or who run local nonprofits.

“Those companies will offer a whole new avenue to our small businesses beyond just the community banks and the credit union,” he said.

How to apply

  • Contact a participating lender that is taking new applications.
  • Calculate the average monthly payroll over the past year; that includes salaries and non-cash benefits.
  • The lender verifies that amount, multiplies it by 2

1/2

  • , then sends that amount to the SBA.
  • The SBA instantly approves it, according to Bulger.
  • Lender has exactly 10 days to get the money out to the employer.