Tennessee businesses secured $6.5 billion under SBA loan program before federal COVID-19 relief limit reached

Staff photo by C.B. Schmelter / First Horizon Bank, formerly First Tennessee Bank, is seen on Thursday, Oct. 24, 2019 in Chattanooga

Tennessee businesses are getting more than $6.5 billion of forgivable loans from the U.S. Small Business Administration this month, or more than half of what the SBA lent nationwide last year.

But demand for the SBA loans under the federal coronavirus aid package still exceeds the amount of funds available. The Tennessee Bankers Association, which reported Friday that banks had processed 34,035 of the SBA Paycheck Protection Program loans already this month in Tennessee, said more businesses need the federal loan assistance to keep operating and limit more layoffs.

The $349 billion funding cap for the Paycheck Protection Program (PPP) was reached Thursday even though many more businesses are still seeking the loans, which when used to maintain staff and pay expenses may be forgiven.

"In just under two weeks, the PPP provided an economic lifeline to small businesses across Tennessee during this unprecedented time," said Colin Barrett, president of the Tennessee Bankers Association. "Unfortunately, more small businesses and self-employed individuals still need assistance."

Tennessee's biggest bank said it processed $1.6 billion of SBA loans, including $175 million to Chattanooga businesses, before the cap was reached on the federal relief program.

First Horizon Bank said it received 8,500 loan requests across the state, including over 500 in Chattanooga. But the bank was able to fund just over a third of all of the requests so far and more are expected if Congress acts to expand the business loan program as President Trump wants.

Jay Dale, market president for First Horizon in Chattanooga, said bankers from Chattanooga's largest financial institution spent over 10,000 hours in15 days for the first round of applications but were still unable to process all of the requests before the funding cap was reached.

"We are working as quickly as possible to have our next round of applications ready once the funds are accessible," Dale said. "We are hopeful that Congress will move quickly to assist our small businesses. The funds made available through the PPP (the Paycheck Protection Program) are a life-line to so many small businesses."

(READ MORE: Tennessee Gov. Lee: COVID-19 'can't shut our economy down for months on end')

Pinnacle Financial Partners, the second biggest bank headquartered in Tennessee and the fourth biggest bank in Chattanooga, processed even more SBA loans. Pinnacle said it received over 12,000 applications requesting $2.3 billion and received approvals for $1.8 billion of those requests before the cap was reached.

"We're still reviewing and processing the rest as if the money had not run out so they can be ready and in line when (if) more funding is approved," Pinnacle spokesman Joe Bass said.

Terry Turner, CEO of Pinnacle, noted that SBA lending volume was more than 29 times greater than is annual lending volume in the past and was implemented in only a few days.

"In just two weeks' time, the federal government conceived of, planned for, approved, implemented and completed a program that distributed $349 billion in emergency funding to small businesses," Turner said. "That's miraculous in any time, much less one with more political disagreement than we've seen in many generations."

The Chattanooga-based First Volunteer Bank said is approved nearly $50.4 million in SBA loans to 556 businesses in just one week.

"Our team members have been working around the clock to get these loan applications processed," First Volunteer President Patti Steele said. "You had to have your offense and defense working together to get the job done."

Truist Bank, formerly SunTrust, said Friday that due to the unprecedented volume of applications for the SBA loans, the bank was suspending more applications until it can process the first wave of loan requests.

"We're committed to updating everyone who has applied for a loan or registered on our website as quickly as possible," said Fabrice Beaulieu, communications manager for Truist.

Thousands of small business owners whose loans have not yet been processed are looking to Congress to approve a Trump administration request for another $250 billion for the program. Lawmakers have been haggling over whether to extend the program as it stands now, or add provisions that, among other things, would help minority businesses. It's unclear when they might reach an agreement that would allow loan approvals to continue.

The fight in Congress over the extension is along party lines. Republicans are amping up the political pressure in hopes of getting a relatively narrowly drawn infusion of $250 billion in funding into the program. Top Democrats are seeking to add funding for hospitals and state and local governments.

Matters have been complicated by the shuttering of the Capitol other than for pro forma sessions that require unanimous agreement in order for any legislation to advance. The sums are unlike anything that has passed under conditions requiring such unanimous consent - a wholly unprecedented situation that has scrambled the power dynamics inside the Capitol.

Democrats like House Speaker Nancy Pelosi of California are also seeking to add provisions that among other things would help minority businesses.

With the stalemate, the business payroll subsidy program likely won't get funding until next week at the earliest.

The Associated Press contributed to this report

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340