Early this year, the future looked bright for Indy Home Design Center, a north-side small business that sells and installs cabinetry and home furnishings.
“The economy was booming, and we had a pipeline that had a lot of jobs in it,” owner Jack Powell said.
Then COVID-19 hit, the pipeline dried up, and Powell, his wife and their two employees are in limbo. “We’re not an essential business, so we’re essentially shut down,” he said.
On Monday, Powell was awaiting word on whether Indy Home Design Center will receive a loan through the U.S. Small Business Administration’s Paycheck Protection Program, which offers forgivable loans to keep small businesses afloat.
This will be Powell’s second attempt to get funding from PPP, which relaunched Monday morning with $310 billion in federal funding after running through its initial $349 billion in 13 days. Some observers think the second wave of funding might be depleted even faster.
The PPP is backed by federal money, but borrowers must apply through a financial institution. For the first pool of funding, banks could apply beginning April 3. Powell applied that day, but by the time his application was approved, all the money was gone.
Powell’s bank, JPMorgan Chase & Co., resubmitted his application on his behalf Monday. Given the huge demand for the loan program, though, he’s uncertain whether he’ll fare any better this time.
“What nobody knows is how big that queue (of applicants) is going to be, and how far down we are on it, and whether the SBA’s going to run out of money by the time they get to us,” Powell said.
One indication of volume: On its website Chase says more than 300,000 of its clients applied for first-round funding, and “despite thousands of people working tirelessly,” the bank was unable to process all of the applications before funding ran out.
Chase said it had “tens of thousands” of applications ready to resubmit on Monday and, for the time being, it was not accepting new PPP applications from clients.
Participation among the mega-banks will likely deplete PPP funding even faster this time around, said Mark Bruin, CEO of The National Bank of Indianapolis.
In the first wave of funding, Bruin said, some of the country’s biggest banks were unable to accept PPP applications immediately because the program rolled out so quickly that they weren’t ready.
“The larger banks, I think, were a little slow to get their systems up and I think there were a lot of people around the mega-banks that got shut out,” he said.
That won’t be the case this time around, Bruin said. “The large banks are geared up and ready to go now.”
Amber Van Til, the Indiana Bankers Association’s CEO, said Indiana’s smaller lenders also are rushing to secure second-round PPP funding.
In the first round, banks in Indiana helped businesses secure 35,990 loans totaling $7.5 billion, according to the association.
On April 17, the association queried its members to determine how many PPP applications were pending when money ran out.
Van Til said the 80% of members responding reported having from 10,000 to 11,000 PPP applications in some stage of completion, representing $1.3 billion in loan requests.
And banks have had more than a week since then to help clients prep for the expected second wave of applications, Van Til said.
“I wouldn’t be surprised if that number has doubled in the meantime,” she said.
Bruin said The National Bank of Indianapolis processed 800 PPP loan applications in the initial wave of funding and had about 250 more ready to go Monday morning when the application portal reopened.
The portal, known as E-Tran, began accepting applications at 10:30 a.m. Monday and was soon swamped.
Van Til said E-Tran was functional for about 15 minutes before crashing for several hours—an occurrence she described as “exactly what we expected” given the heavy usage. “At 10:30 a.m., everyone in America is logging on and the system just isn’t created for that type of exposure.”
Roz Harris, who owns Fit Chicks personal training studio in Fishers and was preparing to resubmit her application Monday, already was considering backup plans if a PPP loan doesn’t come through.
“I’m not super confident, unfortunately,” she said.
Harris applied for a PPP loan during the first round of funding, but she was notified she was denied because she hadn’t submitted proper payroll documentation for the handful of contract workers she employs.
On Monday, as Harris gathered documentation for her new application, she already was thinking of microlenders she might turn to if she misses out again.
Harris said she’s had success pivoting her business to an online training model, but she’s running into cash-flow issues because she’s not able to attract new members right now.
Mary Shaw, owner of promotional-product company Your Image Works, says she applied for the first round of PPP funding and was told she’d been approved, but never received money.
And she could really use it now. Business for the Indianapolis-based company has dropped off dramatically. Clients including the NCAA, universities and athletic conferences have stopped ordering logoed T-shirts and water bottles, and she’s had to terminate one of her seven employees.
So she’s trying again for a PPP loan, but is tempering her expectations. “Until I get the email that says ‘X amount of money has been deposited into your bank account,’ I don’t know,” she said.