LULU GARCIA-NAVARRO, HOST:
Get ready for another scramble as struggling small businesses try to grab hold of a financial lifeline. The Federal Government is restarting an emergency loan program for small businesses tomorrow. That program burned through its first $350 billion in less than two weeks. After complaints that some of the money went to big businesses or the preferred customers of big banks, lawmakers directed that a chunk of the new money be funneled through community banks. NPR's Scott Horsley reports on how one small bank has been helping small business customers get to the front of the line.
SCOTT HORSLEY, BYLINE: In the last three weeks, Edward Barry and his team at Capital Bank made $172 million worth of loans to nearly 600 small businesses. That's about as much money as the Maryland-based bank ordinarily lends out in a whole year. And while the ink is barely dry on those loans, Barry's getting ready to do it all over again.
EDWARD BARRY: (Laughter) like being in a pie-eating contest where first prize is more pie.
HORSLEY: Barry understood early on in the coronavirus lockdown small businesses would be desperate for credit and that money for emergency loans would quickly run out. Capital Bank has a long history of working with the Small Business Administration and mom-and-pop borrowers. So the bank could anticipate what the government would be looking for. Barry and his colleagues built their own application website before the rules were even finalized, giving their customers a head start.
BARRY: We started to kind of lay out end to end, what do we think needs to happen? - knowing there was a lot of empty boxes and said, well, what do we think the answers are? - and write them in pencil or in chalk. And we'll just write them in ink when the government gives us answers.
HORSLEY: This process was more challenging because most of the bank's branches were closed. Barry and the rest of his team were working out of their homes.
BARRY: I have three kids at home who are online doing their schoolwork. I got two dogs and my wife. And when it gets really crowded or noisy here, I tend to do my conference calls walking around my neighborhood.
HORSLEY: Barry pulled bankers off of other projects to work with small-business people who needed loans often at night and on weekends, people like Jennifer Taxson. She's the co-owner of a Washington business that sells light fixtures to commercial and residential customers. Taxson was forced to close her showroom last month and idle some of her seven employees. She says the personal handholding made a big difference.
JENNIFER TAXSON: Working with our small, local bank, knowing who to call, getting guidance without being prompted on how this process works is a whole lot different than not knowing where you upload your documents, not knowing who you call, not hearing back from anybody.
HORSLEY: While many customers at big banks were left hanging, Taxson's loan was approved in about a week. And since she's using the money to pay her employees, she doesn't believe she'll have to pay it back.
TAXSON: We just received the funds. We will be bringing on everybody who we've had to either furlough or partially furlough. Next week, we'll have a full staff of gainfully employed people.
HORSLEY: Barry says his typical small-business borrower has about a dozen employees. He's made loans for as little as $2,500. While some big banks drew complaints they were only lending money to preferred customers, about a third of Barry's loans went to people who'd never banked with him before. The government is paying bankers both fees and interest to make these loans. But Berry says it also feels like an opportunity for banks to do their part to help those who are hurting.
BARRY: They're people you know, your neighbors, your friends, family members. It's your local restaurant, your local coffee shop, your pizza parlor. And that's what keeps people working so hard.
HORSLEY: Barry and his colleagues have been busy preparing a new batch of applications for when the program restarts tomorrow with another $320 billion. Once again, that money is likely to go quickly. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
