Banks are poised and ready to pounce when the next wave of funding becomes available for businesses scrambling to claim forgivable federal loans to help them weather the coronavirus crisis.
"Everybody's going to be rushing at the exact same minute, and because everyone has this backlog of applications it's going to go in 24 to 48 hours — it will go fast," said Jay Dale, market president for First Horizon Bank in Chattanooga.
Banks in Tennessee wrote about $6.5 billion in loans before the money ran out less than two weeks after applications launched for the $349 billion Paycheck Protection Program. Congress was grappling Tuesday to reach a deal to dump another $500 billion into the system for businesses left out in the cold when banks stopped taking applications on Thursday.
Robert K. Fisher, a commercial Realtor with Keller Williams, was in that group.
"To me, I think the real issue is there seemed to be two start dates," said Fisher, who banks with Truist Bank, formerly SunTrust. "The bigger companies got invited on the first start date, and I had to apply on the second start date, so I'm suspicious that the money ran out with the first people and maybe no one in the second batch even got any money."
While a spokesman for Truist Bank said the bank did not stagger applications, some banks, including First Horizon, opened the process in phases to manage the deluge. Anyone who has already applied will be in line when the process resumes, Dale said.
"We did have some that had their application in and complete but the clock ran out," Dale said. "We will prioritize those that had their application in and the money ran out, but once we get the green light we will also start accepting new applications."
First Horizon wrote about $1.6 billion of Paycheck Protection Program loans, including $175 million to Chattanooga businesses, before the federal relief program was depleted. First Horizon received 8,500 loan requests across the state, including over 500 in Chattanooga, but was able to fund just over a third of all of the requests.
Pinnacle Financial Partners processed about 6,000 applications and made approvals for $1.8 billion, and there are another 5,500 applications waiting in the system, said Joe Bass, Pinnacle spokesman.
"We have not stopped running," he said. "We're reviewing applications by hand and uploading them so we can send a boatload of applications to the [Small Business Administration]."
George Wilson, CEO and co-founder of Southern Payroll and Benefits, said his four-person company saw their Payroll Protection Program funds hit their account with Pinnacle on Monday night, and money from their Economic Injury Disaster Loan application showed up Tuesday morning.
Over the last few weeks, Southern Payroll and Benefits has shifted from a focus on business processing for their clients entirely to understanding these relief programs and helping their clients get access to them, Wilson said.
"We've got about half of our clients that have one or the other [loans], and multiple have received both," he said.
The Economic Injury Disaster Loan program, which may be a better fit for some businesses than the Paycheck Protection Program, also ran out of money last week, said Lynn Chesnutt, director of the Tennessee Small Business Development Center. He expects Congress to refresh funding for that program at the same time they replenish the Paycheck Protection Program, Chesnutt said.
To service demand for the Paycheck Protection Program, banks had to build new systems in a matter of days that would have normally taken months to develop. The kinks in the processes are still being worked out, but they've made a lot of progress since the applications opened April 3, Chesnutt added.
"The banks have pretty much figured it out on their side," he said.
Dale said First Horizon will not have to stagger the process this time out.
"This time it's all rolled out so there's no phases," he said. "Now it's just a race to get the money. We'll be ready to run as fast as we can."
Contact Mary Fortune at firstname.lastname@example.org or 423-757-6653. Follow her on Twitter at @maryfortune.