Small businesses scramble for relief loans

Shell gas station owner Suhel Kazani stands for a photo at his Snellville station Monday, April 6, 2020. Kazani owns seven Shell stations in metro Atlanta. Because of the coronavirus pandemic, his gasoline sales are way down, he said. (ALYSSA POINTER / ALYSSA.POINTER@AJC.COM)

Shell gas station owner Suhel Kazani stands for a photo at his Snellville station Monday, April 6, 2020. Kazani owns seven Shell stations in metro Atlanta. Because of the coronavirus pandemic, his gasoline sales are way down, he said. (ALYSSA POINTER / ALYSSA.POINTER@AJC.COM)

Four days after the federal government launched a $349 billion loan program to help small businesses, metro Atlanta business owners' experience has ranged from disappointment to cautious optimism.

With his limousine business shrunk to almost nothing because of the novel coronavirus pandemic, Eric Alimena tried to apply for an emergency loan through the new federal rescue program.

Alimena Limousine & Worldwide Transportation does all its banking with Wells Fargo — a commercial line of credit, a credit card and checking accounts. The relief plan launched Friday, but the bank told Alimena it wasn’t originating the loans yet after he tried to apply online that morning.

Alimena assumed the bank would be closed over the weekend. When he tried to apply for a $37,000 loan Monday morning, Wells Fargo said it was limiting the number of loan applications, and the bank wouldn’t take his application.

“I was blindsided,” said Alimena, who founded his eight-employee company in 2007. “We never even got the chance to submit our application.”

A Wells Fargo spokesman said federal restrictions on the bank’s lending will limit how many relief loans it can make.

Alimena on Monday night applied for a relief loan from U.S. Bank.

Loans will be forgiven if proceeds are used to pay idled workers and monthly rent. But countless companies — restaurants, cleaners, transportation providers and more — are rapidly depleting savings while their businesses generate little or no revenue. Georgia has about 900,000 small businesses, employing about 1.9 million workers, according to the Small Business Administration.

Big Brothers Big Sisters of Metro Atlanta was the first nonprofit group in Georgia to get its application approved, the SBA said. The group asked for a $500,000 loan.

Still, small business owners should be cautious given that the federal government has the herculean task of distributing hundreds of billions of dollars in a matter of weeks, said Rob Klingler, a lawyer at Bryan Cave Leighton Paisner who represents community banks.

Banks and credit unions face huge risks of their own, too, Klingler said. They can’t get stuck with loans that won’t be repaid or they run afoul of unclear regulations.

“Banks are not, contrary to popular opinion, in the business of just sending out money without some understanding of how they’re going to get that money back,” Klingler said.

If borrowers use the proceeds correctly, they will be off the hook for repayment, and the government will buy back the loans from the issuing banks.

Congressional leaders have said they expect the loan-relief program to run out of money by June, while some bankers say it could be drained by the end of this month. Congress and the White House already have started talks on approving a second round of funding. On Monday, the Federal Reserve said it will provide a financial backstop for banks to speed fund distribution.

Business owners must act immediately if they want funds from the current round, said Chip Mahan, CEO of Live Oak Bank, the nation’s largest originator of Small Business Administration loans. Applicants must first establish an SBA account number, called an E-Tran number, before an application is considered.

“The most important thing is to get in the queue,” said Mahan, whose bank has an office in Buckhead. “Until your bank gets the E-Tran number, you’ve got absolutely nothing. Your application will be sitting at the bank in never-never land.”

Some borrowers still had problems. DeForest Winslow, owner of home remodeler Splash Kitchens & Baths in LaGrange, said it was hard to determine the amount he should request. Applicants use a formula based on average monthly payroll to ascertain their loan amount, but it was unclear whether payroll tax was included. He also couldn’t tell if he must rehire the same people who were on his payroll before his business closed. Ashley Bell, the SBA’s regional administrator in Atlanta, said payroll tax is included, and a company isn’t required to rehire the same workers, only the same number of workers.

Business owners in desperate need of cash shouldn’t wait much longer to apply, said Ron Quinn, CEO of Peach State Bank & Trust in Gainesville. The bank already had processed 50 applications totaling $16 million as of Monday for several area companies and nonprofit groups. That’s close to its ceiling.

“We think we can put $50 million of these loans on our books, and we will probably hit that by Friday, if not sooner,” Quinn said.

Suhel Kazani, who owns seven Shell gas stations in metro Atlanta, said sales have dropped from about 5,000 gallons per day at each station to about 1,000 gallons because few people are driving. He applied for a $200,000 federal relief loan through Platinum Federal Credit Union in Duluth, hoping to retain his 50 workers and provide assistance to customers.

“We’re not going to let people go because they have families,” Kazani said. “We’re going to start offering free coffee and soft drinks to doctors and medical staff. We’re here for the long run.”