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Delaware gets $1.1B out of PPP before funds run dry

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WILMINGTON – Ed Osborne, owner of Osborne’s Auto Repairs in Wilmington, was one of 5,171 Delaware business owners who was able to secure a PPP loan from the U.S. Small Business Administration, getting $19,800 from TD Bank. 

Ed Osborne, owner of Osborne Auto, was one of more than 5,100 Delaware business owners who received PPP loans. | DBT PHOTO BY JACOB OWENS

“If you applied early you had a good shot of getting some money,” he said. “If you didn’t, you probably missed out.” 

Osborne said that he talked with TD about the program before application forms were even ready and submitted one as soon as they were April 3. Even then, he did not hear anything back for about a week, hearing on April 16 – the day that funds nationwide were exhausted – that he should be getting some relief. 

“My anxiety level at 3 o’clock was very high and at 3:30, when I got the acceptance email, I felt a lot better,” he said. 

With all $349 billion of the U.S. Small Business Administration’s Paycheck Protection Plan funds allocated in less than two weeks, Delaware small businesses got a $1.1 billion chunk of the pie, but still saw less support than other less populous states. It may get another chance as Congress discusses a new round of $300 billion this week. 

While Osborne’s anxiety was relieved – at least for the time being – many other Delaware businesses were not as lucky. 

The rollout of PPP loans was notably rocky, with the SBA posting its instructions for the program the night before it was set to open. Some banks were slower to get enrolled while larger banks with established infrastructure for application processing doled out billions in funds.  

M&T Bank processed 1,610 loans in Delaware worth $316 million. It reported receiving about 30,000 applications, funding more than 27,700 company-wide. As a comparison, M&T processed about 1,500 SBA loans total in 2019. Bank spokesman Scott Graham said the average size of a PPP loan in its Delaware market was $197,000, which is roughly in line with the SBA’s national average.

“For all of M&T, about half of the nearly 28,000 loans we funded were for no more than $50,000,” Graham said. “And about three-quarters of them were for no more than $150,000.”

Delaware moved up slightly in the state rankings for the PPP program after ranking dead last in a preliminary report on the program’s first 70% of allocations. The First State saw 5,171 loans approved for a total of just under $1.1 billion – ranking 49th in loans approved and 47th in aggregate value, despite being the 45th most populous states. 

Once again, several less populous states brought in more loans and money, such as North and South Dakota each seeing more than 11,000 loans a piece worth more than $1.5 billion and $1.3 billion, respectively. Delaware only bested Alaska and Wyoming, two of the least populous states in the country, in loan value, although Wyoming saw more loans approved than Delaware. 

At the other end of the spectrum, the states that saw the biggest impact were also the nation’s most populous, with California receiving more than $33 billion, Texas getting more than $28 billion, Florida getting more than $17 billion and New York getting more than $20 billion. 

Across the country, more than 3 million loans were approved by nearly 5,000 lenders, the SBA reported April 16. Of those loans, 74% sought $150,000 or less, but more than 40% of all dollars allocated went loans of $1 million or more. 

The $349 billion program, approved by Congress in March as part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, intends to provide small businesses with collateral-and-guarantee-free loans to pay up to eight weeks of payroll as well as benefits. It can also be used to pay rent, utilities, and interest on mortgages. 

The loans are underwritten by the SBA using the stimulus funds, but the program required SBA-approved banks to process the applications for eligibility in order to expedite the massive amount of work. 

Payments on the two-year loans with 1% interest are deferred for six months and if at least 75% of the loan is used on payroll costs over the eight weeks, that debt will be forgiven. That eligibility requires an employer to maintain workforce and salary levels and rehire furloughed employees. If workforce or compensation levels fall, the level of forgiveness on the loan will decline as well. 

That aspect is important as business owners like Osborne contend with dramatically different marketplace amid the pandemic. Osborne, who has run his auto-repair shop on A Street for 32 years, said he has never seen the decline in business that he has during the pandemic. 

“Probably 95% of my business is city office workers,” he said, estimating the 30,000 cars coming into the city each day has fallen to maybe 5,000 in recent weeks. “My business basically left town.” 

Osborne said the loan would fund his payroll of two: him and his son. Although he could shut down and claim unemployment – technically the shop is owned by a limited liability corporation of which he is an employee – Osborne said he has never wanted to rely on such assistance.  

If the pandemic persists and the eight weeks of payroll expire without reopening in sight, Osborne said he was not sure how long he would try to gut it out. 

“Business is still trickling in,” Osborne said, noting that he is relying on a loyal customer base. “But I sat here for three days and not one person came in or called.” 

While business owners like Osborne were able to get some relief through the PPP, others were left on the outside looking in. That is why the White House and Congress spent the weekend negotiating a second round of PPP funding, reportedly worth $300 billion. A vote on the measure could come as early as this week.

By Jacob Owens

[email protected]

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