Alex Lelchuk was watching President Donald Trump on television this week when he heard a familiar voice giving the president some tough news.
Noah Wilcox, a community banker from Minnesota, was telling Trump that his administration was bungling the rollout of the $349 billion Paycheck Protection Program. Most disappointing, Wilcox told the president, was that a third of the 5,000 community banks in the U.S. were still waiting for the government's approval so they could start taking applications.
That caught Lelchuk's attention. For four days, his application had been in limbo at U.S. Bank, where he has been doing all of his banking for years. Lelchuk, who owns a small technology business in St. Louis Park, decided to contact Wilcox, an old client, and catch up. A few hours later, Lelchuk had a new account at Minnesota Lakes Bank and a completed application.
"We just might move all of our banking over there," said Lelchuk, owner of Lelch Audio Video. "We don't have a good reason for being with a big bank. When push came to shove, they weren't able to be there for us."
Though an outpouring of demand prompted the Trump Administration to request another $250 billion for the emergency loan program this week, many small-business owners continue to complain about the challenges they face in finding a bank willing to handle their submission.
Some small-business owners said they can't even get access to the $10,000 "disaster" grants the federal government promised to start delivering two weeks ago. They said the government kept changing the application process and has yet to tell them whether they qualified for the aid.
"I have no idea what to do," said Mandy Wroolie, owner of Minisota Play Cafe, whose disaster application stalled when Wroolie was unable to immediately produce all the requested records. "The website won't even let me log in to finish the application."
Like most small-business owners, Wroolie is counting on the Paycheck Protection Program, which offers forgivable loans worth up to $10 million to help companies survive the coronavirus-induced recession. But she doesn't know how to get started.
Most of the nation's largest banks have created barriers to small business owners, requiring them to be existing customers in order to process their applications, according to a Star Tribune survey of eligibility requirements. Most of the 10 biggest banks won't handle the work for companies that didn't have a business checking account with the institution before Feb. 15. That penalizes smaller companies that don't have business accounts, or others like Wroolie, who uses a credit union that isn't participating in the program.
Some big banks won't take applications if owners do business with a competitor, or if they are submitting applications through more than one financial institution in hopes of speeding up the process. One big bank even offers personal assistance with the applications to any company with revenue above $5 million; such help is not provided to smaller firms, according to the bank's website.
"I think it's outlandish," said Wilcox, owner of two community banks in Minnesota and chairman of the Independent Community Bankers of America. "The kind of behavior displayed by these big banks is unfortunate. It is not consumer-focused. They are trying to take advantage of the situation."
Ian McKendry, a spokesman for the American Bankers Association, declined to comment.
Tim Welsh, vice chairman of consumer and business banking at U.S. Bank, said he hopes to eventually open up the process to noncustomers, but he said the bank decided to focus on existing clients first because it can process more applications in a shorter period of time.
"I understand the anxiety people feel out there," Welsh said. "It breaks my heart to hear that there is a customer who feels disappointed, because we are doing everything we can to move these loans through as quickly as possible."
In Minnesota, some smaller banks are opening the door to all comers immediately. That includes tiny players like Minnesota Lakes Bank, with $104 million in assets, and regional institutions such as Bremer Bank, with $13 billion in assets.
"We all know the economy will not return to health unless the small-business community returns to health," said Jeanne Crain, Bremer's president and CEO. "So our focus was: How can we step up and be part of the solution?"
Since Congress approved the emergency loan program two weeks ago as part of a $2 trillion stimulus package, Crain has been redeploying the Bremer's assets, moving employees into new roles to handle a crush of applications from small-business owners in Minnesota, North Dakota and Wisconsin. About 300 Bremer employees are now working on emergency loans, which must be approved by the U.S. Small Business Administration.
So far, Crain said, Bremer has processed 3,100 applications, with companies asking for amounts ranging from $3,100 to $9.9 million. More than 1,400 of those applications have been approved, with companies poised to collect a total of $685 million. The loans will help 72,442 employees keep their jobs, Crain said.
"That's the number we're focusing on," Crain said.
Joel Wittenbraker said he hadn't done business with Bremer Bank for years until the recent crisis. Wittenbraker, CEO of a Red Wing manufacturer called Mactech, said he reached out to Bremer when his current bank made it clear it was not well-informed about the program. He declined to identify the bank.
"It was unbelievable how responsive Bremer was," Wittenbraker said. "It felt like they weren't dealing with anybody but us."
Wittenbraker said he asked for more than $500,000, and the SBA approved the request Monday, just three days after the program went live. He said the money will help protect the jobs of 90 employees in four states, including 50 in Red Wing.
Wittenbraker said he opened an account at Bremer to make it easier to disburse the funds. "They deserve our business," he said.
Though the recession is wrecking the balance sheet of countless companies, community banks could wind up as one of the few winners in this recession, Wilcox said.
"We are getting a lot of inflow from big-bank customers, because the big banks either won't do the work or it is a low priority for them," said Wilcox, majority owner of Minnesota Lakes and Grand Rapids State Bank. "I think some of those relationships are going to turn into long-term relationships."
Wilcox said his two banks have gotten approval for 130 applications totaling $19 million, with 37% of those applications coming from first-time customers. Wilcox wants to step up the pace, but he said the government has yet to provide access to the loan system to six of his employees processing the paperwork.
"The SBA and the [U.S.] Treasury Department have been saying on national media it is ahead of schedule, no glitches," said Wilcox, who made his presentation with other bankers to the president via live-video. "We're all sitting here saying, what are you talking about?"
Unable to access federal programs, some business owners have tried to qualify for a $30 million emergency loan program overseen by the Minnesota Department of Employment and Economic Development. But the program excludes many types of small businesses and requires owners to repay at least half of the funds.
So far, the state has approved just $4.2 million in loans for about 135 firms, but there is a backlog of nearly 3,000 applications seeking a total of $90 million. The department plans to ask lawmakers to add another $30 million to the pot. Loans range from $2,500 to $35,000.
State Rep. Kristin Robbins, R-Maple Grove, is working on legislation that could expand the program by at least $10 million. Instead of loans, Robbins said she wants to focus on providing grants to smaller businesses like Wroolie's cafe in Champlin. Robbins said Wroolie's recent testimony to the Legislature made it clear that small-business owners, particularly those with fewer than 50 employees, need more help.
"The state or federal loans don't work for many small-business owners," Robbins said. "A lot of them feel, and justifiably so, that they shouldn't be asked to take out a loan to cover the losses when their businesses closed through no fault of their own."
