The government check for Mr. Mudbug Inc. cleared on Wednesday, providing emergency funds to the Kenner-based food maker that will allow the company to keep its 70 employees paid for the next two months and possibly survive. to the coronavirus crisis.
Mike Maenza, founder and president of the 34-year-old food company, said the approximately $ 300,000 forgivable loan he was able to raise under the Small Business Administration’s paycheck protection program is a godsend as he scrambles to keep his prepared food business going until the state lifts the lockdown to mitigate the pandemic and allows restaurants, bars and hotels to resume normal service.
Darren Guidry, a loan officer at Home Bank in Lafayette, started on Friday like many other bankers across Louisiana and the United States: preparing …
“It reminded me of the time after Katrina when we could leave our FEMA trailer,” Maenza said. “I was very, very happy when I found out that we were funded and that we could keep our team together.”
Mr. Mudbug is one of the lucky companies that have been approved for P3 loans, as part of the federal government’s $ 2.2 trillion emergency economic stimulus package. The program, which began on April 3, provides loans through commercial banks of up to $ 10 million at an annual interest rate of 1% for businesses to cover payroll and some operating expenses, including rents, mortgages and utilities, the portion used for payroll being refundable. .
As of Friday, the SBA said just over 17,000 Louisiana companies had been approved for about $ 3.7 billion in PPP loans. Nationally, over a million loans worth over $ 247 billion have been approved.
While business owners like Maenza have been able to overcome some initial issues with application forms and get their funds fairly quickly, other businesses have encountered obstacles.
Lisa Lusco said she and her husband Barry, owner of The Seafood Source of Louisiana, a fish wholesaler in Baton Rouge, had been trying for weeks to get their PPP application through their bank, Capital One.
“For the past two weeks, they’ve been ‘fixing problems’,” she wrote in an email. “This is unacceptable because these loans were designed to (be) a quick bridge for employers to keep their employees. We value our family of employees and do not want to continue with layoffs, but time and money are running out. . “
Capital One did not respond to a request for comment.
It’s a story shared by many businesses in Louisiana and across the country: Some businesses have found that their requests are able to go through the process quickly, while other times complications have dragged the process out.
Craig Betzer, who employs about 20 electricians at Kastner Electric in New Orleans, said he spent about three weeks trying to get Hancock Whitney, the company’s main bank for the past 15 years, to help him process his SBA requests. Much of his payroll each month goes into the National Electrical Benefit Fund to cover the retirement and health benefits of unionized electricians, he said, and that seems to be a problem.
About one in ten workers has lost their job in the past three weeks.
“I told them, ‘I’m not a banker, I’m an electrician and if I don’t get this loan I won’t be open,'” Betzer said of his growing frustration, especially when reading the Press articles. that PPP’s $ 349 billion first round was about to run out this week.
Hancock Whitney did not respond to a request for comment.
This week, he turned to First Bank & Trust, a small New Orleans-based community bank with which he had no previous relationship. Betzer said the bank processed his line in less than two days.
Dawn Starns, Louisiana director for the National Federation of Independent Businesses, a small business advocacy organization, said small businesses in the state have so far been harmed by the program. While an estimated 17,000 businesses may have received loans, that still leaves a large chunk of the state’s 430,000 small businesses still waiting for help, she said.
“The comments we’ve heard are that some of the bigger banks and regional banks haven’t been responsive,” Starns said. “A member I heard about had a long-term relationship with one of the big banking groups and went into a community bank that he didn’t have a relationship with and was approved of.”
For many banks, low interest rates on loans can make business unprofitable, or at best low profits. Some smaller banks say they are nonetheless an opportunity to attract new customers from larger competitors, even if the loans themselves do not add to their bottom line.
Gary Blossman, managing director of First Bank & Trust, said low-interest loans might not be enough to cover the cost of processing them, but his bank was determined to enroll as many customers as possible.
“Yesterday evening, we processed 250 applications for a total of $ 65 million. At 10 am this morning, it was up to 360, ”he said. The bank normally processes 70 business loans per month. After all the technical issues at the start, Blossman said, “It’s going a lot faster now and we’re pumping out as much as we can before the funding runs out.”
But even for companies that have been fortunate enough to see their PPP loans go off without a hitch, they still struggle to stay afloat.
Gary Bordes, who runs Mid-City Physical Therapy with his partner David Tucker, said their loan application to cover three employees went quickly and smoothly as they kept good records and it’s a straightforward case.
But the money doesn’t cover Bordes and Tucker’s lost wages, nor does it compensate for the 60% loss of business they suffered.
“Our accountants told us to use (the PPP loan) only for wages, don’t put anyone on leave or you will be raising red flags with,” the Internal Revenue Service, Bordes said.
Maenza from Mr Mudbug said the priority is keeping the workforce together so they don’t lose their USDA certification, one of the food maker’s main strengths. Even so, Mr. Mudbug will not be able to survive for too long by eating only 15,000 pounds of food per week compared to at least 150,000 pounds per week just a month ago.