Santa Barbara bankers inundated with federal loan applications

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The federal rollout of the $ 350 billion Federal Payroll Protection Plan (P3P) has been a roller coaster ride for bankers and employers. In Santa Barbara, the demand for PPP loans by local employers trying to pay their payroll is “insane,” according to a person who answered the phone at the Union Bank offices in downtown Santa Barbara. At Montecito Bank & Trust, over a thousand apps appeared on the portal in the first four hours, Megan Orloff said.

The “application cascade” was examined over the weekend, Orloff said, with the bank having returned 250 voicemail messages and emails to boot. To keep its customers informed of the latest news, the bank has set up a COVID-19 Resource Website.

The program aims to give employers loans that allow them to maintain payroll and costs, like medical insurance and family leave, in order to keep employees enrolled – and not to benefit from unemployment insurance. When the coronavirus releases its grip on American life, the idea is for employees to get back to work right away. Certain costs such as rent or mortgage interest and utilities may also be covered. And the main advantage is that the loan would be canceled if the employer keeps all of its employees.

Michelle Martinich of the American Riviera Bank observed that there was a huge need for the program in the community, but a lot of confusion because it happened so quickly. Even now, changes are happening on a daily basis.

At first, it was not clear what level of due diligence the payroll documentation should have, said accountant Tony Vallejo, who helps his clients with their payroll formalities for loans. Without this advice, banks and borrowers might later learn that the Small Business Administration would not forgive the loan. For the relatively small banks in Santa Barbara, a 1% loan is unsustainable; for those who borrow out of necessity, it would be even worse.

Banks must also ensure that the borrower clearly understands the terms of the loan, Martinich said, and the rules they must follow to get the loan canceled. For example, his bank was still awaiting information on whether an employer contribution to a 401k was considered a salary expense. In the meantime, the Small Business Administration website is cluttered with applications.

Sarah McLelland is one of the Montecito Bank & Trust specialists at its COVID-19 relief center in Goleta, which is among the banks running SBA applications for businesses in Santa Barbara trying to stay afloat in tough economic times.

In the week before the COVID loan program rolled out, loan terms changed several times, said Vallejo, a former member of Goleta city council. Congress allowed no more than a 4 percent loan over 10 years, he said, but three days before the April 3 deployment, it went down to two years at half a percent, and rebounded to two years at one percent the next day

“Depending on how you look at it, it’s been a challenge or a nightmare,” Vallejo said. “Bankers work very hard,” he added, citing an email he received at 2 a.m. on the latest update.

April 3 program aimed at small businesses and sole proprietorships. Starting April 10, independent contractors and self-employed people can request payroll and certain other expenses through PPP.

An ongoing video conference and webinar series by SCORE Santa Barbara, a free nonprofit mentoring company, attempts to fill the information gap and provide guidance to businesses. On the SCORE website (SantaBarbara.score.org) is a PPP update of April 6. Evening webinars on:

• Corona Crisis Relief for small businesses April 9

• Para pequeños negocios y borrendedores April 9

• the Economic Disaster Lending Program (EIDL) on April 13

• Pivot your business to e-commerce on April 15

• How to email the market during a downturn in business on April 23

The United States Chamber of Commerce sponsored a webinar with Jennings Imel, the executive director of its Western Regional Office, which can be viewed free of charge after registration. here. Imel covers a huge territory in less than an hour, including the $ 2.2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) law. Part of that includes PPP, but also the deferral of payroll taxes, tax credits, how PPP and EIDL loans interact, and more. Imel recommended the Treasury website home.treasury.gov/cares for up-to-date information.


At Independent from Santa Barbara, our staff are working around the clock to cover all aspects of this crisis – sorting out the truth from the rumor. Our journalists and editors ask the tough questions of our public health officials and share awareness of how we can all help each other. The community needs usnow more than ever – and we need you to keep doing the important work we do. Support it Independent making a direct contribution or with a Indy + subscription.

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