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Small businesses hungry for federal loan aid

Georgia banks approve over $14 billion in loans through SBA program

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METRO ATLANTA, Ga. — Small businesses have been rushing to get a share of more than $600 billion in relief loans made available through the Small Business Administration.

The first round of SBA’s Paycheck Protection Program loans, issued in mid-April, totaled some $350 billion and were gone in less than two weeks. A second round for $310 billion was made available April 27, and half the money had been awarded within the first week.

David Oliver, senior vice president with the Georgia Bankers Association, reported that over the past month, virtually all the state’s banks — about 200 in all — participated in distributing $14.1 billion in the government loans.

“We had more than 113,000 Georgia small businesses approved for those loans over a relatively short period of time,” Oliver said. “It’s going to help them cover their payroll costs, help them cover their rent and utilities, help them weather this public health crisis.”

Brad Serff

SERFF

The special Paycheck Protection Program loans were created to allow small businesses to get their footing after the devastating shutdowns created by the coronavirus pandemic. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.

The president of the Small Business Administration reported last week that the agency processed more loans in less than 14 days than it had in 14 years.

Local bank stays busy

The rush was on locally, as well.

Brad Serff, president and CEO of Providence Bank in Alpharetta, said banks are not immune to the pandemic. He’s had to close the lobby to protect his staff and customers. He also rotates employees so half are in one week, while the others work from home. Customers are serviced either by phone, the drive-thru or online.

“So, you’re running a bank with about half the staff, and you’re still trying to do all the things for your client that you’ve always done,” Serff said. “For our bank, we’re looking to do a year’s worth of lending in a month’s time.”

Much of Serf’s attention lately has focused on getting small businesses help through the loan program.

“Businesses aren’t designed to have zero revenues or limited revenues for any extended period of time,” he said. “The loan program was put into place with the idea employers would continue to pay their employees and not furlough them or lay them off. This is basically an eight-week incentive to keep employees employed.”

Serff said payroll accounts for somewhere around 30 to 40 percent of most business’s expenses. The loans will give these businesses a little breathing room to meet their other expenses, he said.

There is no way to know whether the two waves of SBA loans will be enough, Serf said, but he is hopeful.

“I think it depends on how the reopening of our state goes,” he said. “The ones that applied, eight weeks forward should give them enough buffer to be back up and running as normal. If this thing spikes and we have to go back to a stay at home order or we can’t open up different industries or there are more strains put on our business economy, then it might not be enough.”

PPP Loan graphic

Loan program relieves pressure

One business breathing a little easier now is Axios Research in Alpharetta.

President and founder David Holcomb said, at first, he didn’t know whether to apply for the SBA loan, but he’s glad he did.

“For us, the money is simply used for payroll,” he said. “Also, we will use it for insurance, I cover 100 percent insurance for my employees. That’s not cheap.”

Holcomb launched the title search and services company in 1997, so he’s seen a few rough spots. He has nine employees on the payroll.

At the outset of the Great Recession in 2009, Holcomb said he made payroll by shorting his 401(k).

“This time I didn’t have to do that,” he said. “That’s what some business owners do, because those who work for us, they’re as important as family.”

Axios has been open every day, performing most of its work, albeit in a modified form and with limited exposure to clients.

The PPP will enable Holcomb to provide his employees some sense of security. These are not easy times for anyone, Holcomb said, and small businesses need support.

“Our business, we’re down in the financial gutter with everybody else,” he said. “We’re down 35 percent this month, from April of last year. So, it’s real. There is a real need for something like this, because I don’t have a 35 percent profit margin.”

Inspired by the necessity of the loan program, Holcomb reached out to U.S. Rep. Lucy McBath’s office, not once, but twice.

“I told them this is as important as it gets, because if small business goes under, the millions of people who file unemployment will be amazing to people. They will have no clue how many people [small business] employs.”

Holcomb weathered the first part of the storm meeting payroll for three weeks before the loan came through.

“I never, ever expected to get a dime,” he said. “Providence [Bank] did an amazing job.”

Holcomb said he’s hopeful the loans, along with a recovery, will be enough.

“I’m sure there are a lot of small businesses that are in worse shape than we are, those who couldn’t make their first payroll, and, by the second payroll, they couldn’t pay their mortgage,” he said. “There are a lot of people like that.”

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