In less than six weeks, Arizona banks have succeeded in processing billions of dollars in forgivable loans for small businesses through the new federal Paycheck Protection Program (PPP). The program is designed to help businesses retain employees by keeping them on the payroll during the pandemic or recalling them from furlough.
The most recent figures show that almost $8.9 billion in loans have been approved in Arizona in the first two rounds so far, according to the U.S. Small Business Administration (SBA). The second round is still open and accepting.
Banks in Arizona of all sizes have had the daunting task of fielding the crush of applications and processing hundreds of millions of dollars in loans.
Among the largest banks in the push to get these loans processed are Bank of America and JP Morgan Chase. In round two that started April 27, these two banking giants have secured over $1 billion in loans for small businesses in Arizona.
With the second round still in effect, and a possible third round on the way, they’re not stopping.
“We continue to receive and process new applications. We are happy to see the SBA has been processing submissions at a faster rate, and hopefully there is sufficient funding for everyone in need,” said Dean Athanasia, head of Consumer and Small Business at Bank of America.
Bank of America top lending bank for PPP second round
Bank of America has been the country’s number 1 lending bank in the second round of the PPP program, company officials said. During round two, the bank has approved loan applications for more than 265,500 small businesses, representing $24.9 billion in needed relief.
In Arizona, the bank has accepted more than 9,200 applications from businesses worth more than $684 million, with an average loan amount of $85,300. About $450 million in loans have been secured for more than 6,800 businesses.
Over 7,300 of these applications are from Phoenix-area businesses, and 5,420 have been funded with an average loan amount of $67,600, according to the bank.
Almost all applications — 98 percent — came from companies with 100 or fewer employees. Nearly a fourth came from low-to-moderate income neighborhoods.
JP Morgan Chase loans support 3 million employees nationwide
During round two, Chase received approval for 211,000 loans, totaling about $15 billion for its small business customers across the U.S. In total, the firm expects to fund about $29 billion in the grants to over 239,000 businesses from the first two rounds, helping to support 3 million employees.
In Arizona, Chase has secured $1.2 billion for 10,500 businesses since the inception of the PPP. The average loan size has been $116,000.
About 50 percent of the loans went to companies with fewer than five employees. Over 75 percent of the loans were for under $100,000.
It’s been an intense several weeks, said Chairman and CEO Jamie Dimon.
“Thousands of dedicated JPMorgan Chase technologists, bankers and others worked tirelessly to support the federal government in one of the largest and most ambitious emergency lending facilities in history,” Dimon stated.
Smaller Arizona Federal Credit Union secures $44 million for companies
Smaller banks have been working tirelessly as well.
Arizona Federal Credit Union’s small business loan department, received more than 500 requests in 72 hours when the loan program first kicked off in early April, said COO Jason Paprocki.
As of Tuesday, the credit union, which has 130,000 member-owners, has funded 435 PPP loans for $43.8 million, with about another 80 applications being processed. It expects the total loan amount to exceed $45 million.
One of the drivers was their acquisition of Scottsdale-based Pinnacle Bank that was already an SBA approved lender and Arizona Federal was able to jump in and help navigate the process quickly, Paprocki said.
In the end, the loans were able to keep 168 businesses, and countless employees receiving paychecks, he said.
“One of our members who owns a construction company called to thank us and let us know they were down to their last $3,500 until the PPP funds hit and they were able to keep 60 employees paid and at work,” says Paprocki. “That sort of story just reminds us that these are not just numbers on paper, but people’s livelihood at stake and we are just thankful to have the opportunity to help.”
Keeping workers connected with employers is the goal
The PPP loan program was made possible through the CARES Act that was passed by Congress in response to the pandemic to provide fast and direct economic assistance for American workers and families and small businesses and preserve jobs for American industries.
Congress approved a total $659 billion dollars for the first two rounds of the PPP program.
The loans are intended to act as an incentive for small businesses to keep their workers on the payroll. As long as companies follow the guidelines required, the loans are treated like grants.
Under the rules, at least 75 percent of the money must be used for payroll. The rest is to be used for operating costs like utilities and rent.
Small businesses with 500 or fewer employees that have been impacted by the pandemic are eligible. That includes sole proprietorships, independent contractors, self-employed persons, private non-profit organizations, and nonprofit veterans organizations that were in operation before Feb. 15, 2020.
Businesses in certain industries may qualify even if they have more than 500 employees if they meet the SBA’s size standards for those industries. Small businesses in the hospitality and food industry with more than one location could also be eligible if their individual locations employ less than 500 workers.
Chambers of commerce across the state are offering their assistance and resources to affected businesses wanting to apply.
The Arizona Chamber of Commerce & Industry also has joined forces with the Arizona Small Business Association (ASBA) to launch the CARES Act Readiness Program for Small Businesses, a free online training to help any small business access the capital they need.
More information is available at www.caresactaz.com, or in Spanish at caresactaz.com/espanol. Further guidance and information on SBA programs for COVID-19 relief can be found at www.sba.gov/coronavirus.