Antares CEO, Ralph Melian in City Business News
WHERE’S THE MONEY, WEEK 3: BUSINESSES WAIT FOR NEXT PPP ROUND
AS SEEN IN 4/22/20 NEW ORLEANS CITY BUSINESS ARTICLE
Ralph Melian thought he was ahead of the game when he applied for a Paycheck Protection Program loan on April 3, the first day the $349 billion initiative began accepting applications.
After gathering the necessary documentation, Melian said his application for Metairie-based Antares Technology Solutions was submitted to the U.S. Small Business Administration by his regional bank on April 13. But the PPP ran out of funding three days later, leaving him still waiting.
“I felt like I did have my ducks in a row,” said Melian, president and CEO of Antares. “I was right at the beginning of the line, constantly making sure I had everything done and double-checking and triple-checking. I don’t know what the criteria is for the SBA processing these applications. I know a lot of other business owners who have gotten funded already, and they all applied after I did.”
Melian and many others are now waiting on Congress, which has been moving quickly to approve a new $483 billion coronavirus stimulus package that adds over $300 billion to the PPP.
The program provides eight weeks of forgivable cash flow through 100% federally guaranteed loans to cover payroll, salaries, rent, utilities and other debt obligations. Banks are in charge of processing applications with the SBA, approving loans and distributing money to customers.
The Senate approved the new stimulus package Tuesday and the House planned a vote on Thursday. It has the support of the Trump administration as well.
At the time it was rolled out, the expectation was that business owners could go to their lender, apply for a loan and get funding the same day. But many business owners weren’t even able to apply in the first round due to their banks not having a digital process in place quickly enough, as was the case with Capital One Bank.
With the program on hold until more funding is added, some banks have paused the application process, while others are still accepting them.
Ron Samford, president and CEO of Metairie Bank, said his bank and many others had applications they had not yet processed when the funds were exhausted.
“Those applications will be processed first when the new legislation is authorized and the new funds become available,” said Samford, whose bank has funded 90% of the $37.5 million in loans that have been approved.
“We’ll then process all the applications we’ve received since the first pool closed,” he added.
Banks have 10 calendar days from the date of SBA approval to close and fund the loans.
Brian Lozes, founder and CEO of Kenemagic, a Metairie-based software company, found success in the initial round of the PPP.
After consulting with his attorney, talking to some accounting groups and viewing a local webinar explaining the program, Lozes said he filled out an application with Chase Bank. He needed to update it the next day since it had some incorrect information, like the wrong contact person in the wrong field, he said.
“We got our funding a day later,” he said. “It was pretty quick.”
Lozes said he believes being an existing client with the bank helped, and added that “the trick was to follow the paperwork very clearly and consistently in its intents.”
“The program was definitely a short-term uplift for our company, no doubt about it,” he said of his 22-employee business, which has pivoted from producing technology geared to industrial groups to helping all companies as they consider working remotely.
“I hope the next round moves quickly,” he said. “Every day that money hasn’t made its way to businesses, it’s a lost opportunity for someone else.”
Melian said he’s had no more success with the SBA’s Economic Injury Disaster Loan Program, which offers non-forgivable loans of up to $2 million at lower interest rates. After applying in mid-March, the program’s guidelines were changed several times, so he kept applying. He hasn’t heard anything in three weeks, he said.
He’s looking into other options, including a Louisiana-led loan program for small businesses, while waiting to see if his PPP application pans out.
Melian hasn’t had to lay off any of his 16 employees and doesn’t expect to, but worries how he’ll cover expenses as clients delay payments.
“I’m hoping that if I do all these (loan applications), hopefully one of them will hit so I can have at least some comfort in the future,” he said.