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Second-round of small business loans may spell final lifeline for many Washington businesses

Small business owners in Washington state are bracing for a second rush for funds to keep their workplaces alive.

The first round of the Paycheck Protection Program, also known as PPP, was meant to keep paychecks flowing at businesses hit hard by stay-at-home orders caused by the COVID-19 pandemic. The goal of the program was to offer small businesses two and a half times their monthly payroll budget, so that they’d be able to keep their employees on their payrolls.

In our area numerous small business owners report applying through banks to take part in the program, but the initial $349 billion ran out April 16 -- officially 13 days after the program launched.

“All of my employees are part-time,” said Cathy Baran – the owner of Lice Spies, a small company that employs seven part-time workers. “Some of them are single moms. They rely on this money to make sure they can put food on the table and pay rent.”

Baran tells KIRO 7 that she paid employees after sending them home at first, but the money quickly ran out. She knows small business owners who’ve successfully landed loans, but she didn’t hear back from Bank of America until Tuesday. According to Baran, they incorrectly calculated her loan and if she wanted to apply for the amount of money she was entitled she’d go to the back of the line.

“It’s really impacting -- I see it firsthand with my employees. What I can do is be on top of these loans and try, and try.”

She’s not the only one that’s hitting a brick wall.

In Bothell, Washington, the owner of a Subway franchise told KIRO 7 she was digging into her personal savings to pay her employees. They kept their doors open as an essential business, but have been losing money -- her husband’s business is in a similar boat. Without a PPP loan, she estimated they’d have to close their doors in two weeks.

In Lakewood, Washington, a barbershop owner said he didn’t get so much as a phone call back from his bank –-- his wife says, they’ve already decided to leave the bank when this pandemic is over. They’d been working with the bank for more than six years.

According to Michael Zillen, an accountant with Zillen & Associates, there are success stories. When the Small Business Administration announced the initial availability of PPP program, he shifted his business from tax returns to loan applications. Tax season was delayed amid the pandemic, so Zillen began to offer his service for free to clients, realizing if he didn’t he may not have clients on the other side of the crisis. He’s successfully netted loans for roughly 10 clients, though he’s run into his fair share of frustrations, too.

Zillen said one of his bigger clients needed to fill out six individual forms -- one for each of his restaurants -- instead he was given only one form from Bank of America, which delayed his ability to get through the process quickly.

Bloomberg reports that lawsuits have been filed against a number of larger banks like JP Morgan Chase, Wells Fargo, U.S. Bank and Bank of America over how PPP loans have been handled.

“They’re getting into so much hot water right now from these small businesses,” said Zillen. “If someone causes a storm, they’re now having lawyers reach out to you.”

According to Bank of America, they’ve had their own hardships. The program didn’t exist more than a month ago, and in a matter of days they received more than 370,000 loan applications. The company has roughly 8,000 workers trying to go over the loans -- then the money ran out.

That may explain why some smaller businesses are touting success stories with smaller banks.

Zillen said one of his clients had to correct paperwork, and one bank kept their doors open later than usual so a client could make an amendment. They eventually got a loan before the money dried up.

“There are some bankers out there that are really working their butts off and trying really hard to service their clients,” said Zillen.

That leaves some level of hope for small businesses that are still seeking loans with a second wave of funding expected -- Congress is looking at adding an additional $310 billion, a deal that is expected to be quickly passed into law if it reaches President Donald Trump’s desk.