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The Fox Theater in Montrose is closed as life in Colorado shuts down in response to the new coronavirus. (William Woody, Special to The Colorado Sun)

By the time The Bluegrass Lounge in Arvada was allowed to apply for one of those potentially forgivable pandemic loans through its regular bank, the $349 billion federal program was nearly depleted. The fund ran out of money two days later, without Bluegrass Lounge getting very far.


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On Monday, the restaurant tried again, but this time it was prepared. It had found a new lender who had prepared an application before the federal Paycheck Protection Program reopened with an additional $310 billion made available by Congress for the small business loans. 

“We are in the queue,” said a hopeful Joshua Schwartz, manager of the bourbon bar, on Monday.  “We were also prioritized and told we would be one of the first from A10 Capital to get funded. So hopefully we’ll be seeing some funding soon.”

Small businesses, banks and lenders have learned a lot during the two weeks of chaos that kicked off the first round of paycheck loans on April 3. The much sought-after loan, which will be forgiven by the federal government if most of the money is used for payroll, saw some of the application and forgiveness rules change nearly daily — including after the money was maxed out on April 16. Many small companies said they were unable to get their bank’s attention or find a bank that would work with them. 

“After the first round, it was obviously eye opening,” Schwartz said in an interview last week. 

The Bluegrass Lounge in Arvada had planned to add a convenience store this summer but decided to open its Gold Line Grab-N-Go bodega this month to help financially support its staff during the coronavirus stay-at home order. The store in downtown Arvada sells food and products like hand sanitizer. (Provided by The Bluegrass Lounge)

The Bluegrass Lounge has kept its staff employed during the coronavirus shutdown by selling off its entire stash of rare spirits, opening up a bodega to sell produce and hand sanitizer and having an employee tip jar available as customers pick up food (each of its 15 employees got $500 last week, thanks to the generosity of customers).

But when the bourbon bar didn’t get the loan, Schwartz said, “we had to readjust and make sure that we’re keeping the (employees’) salaries lower, but obviously getting the employees the money they need.”

He said he  knows the company must be realistic. 

“If we are not able to get the next round of PPP, we do have to be realistic and think about the future,” he added. “From what I’ve heard, loans didn’t get dispersed to the right people.”

SBA changed guidance in real time

That was a rule the SBA tweaked a week after the funds ran out, making it clearer to larger companies what requesting the loan in “good faith” means. If your market value is worth hundreds of millions of dollars or you have access to other sources of liquidity, you probably don’t qualify. “For example,” reads the SBA guidance, “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”

And at the end of the first round, 25% of the approved loans were to companies that shared 83% of the $349 billion pot. After a public outcry, some large businesses, including Ruth’s Chris Steak House, Shake Shack and Potbelly Sandwich Shop returned their $10 million to $20 million loans. Some private companies did as well, including the Los Angeles Lakers, which returned its $4.6 million.

At least 11 publicly-traded companies in Colorado received more than $1 million in federal forgivable loans, including Intrepid Potash, the 445-employee Denver fertilizer manufacturer that received a $10 million paycheck loan through the Bank of Montreal.

MORE: Colorado’s $7.4 billion share of “forgivable” coronavirus loans includes handful of multimillion-dollar payouts

At least one local company, the 335-employee DMC Global in Broomfield, returned its $6.7 million “to avoid any further disputes” after the SBA updated its guidance on the eligibility of public companies, the company said in a news release on Thursday. 

In the first round, 41,635 small businesses in Colorado were approved for $7.4 billion in paycheck loans. The Colorado Sun received a loan.

On Monday, SBA administrator Jovita Carranza shared on Twitter that $2 billion had been returned by companies that had declined the loans.

Chaos continues

The confusion in the paycheck loans continued into Monday. Don Childears, CEO of the Colorado Bankers Association, said the SBA seemed to be limiting the number of loans a bank could apply for without letting the banks know what that number was. Bloomberg reported Monday that the SBA was limiting loans to 350 per hour per lender.

“In the first round, the SBA was completely unprepared and we had major technical problems with access to their system,” Childears said Monday. “Today, the access seems to be about decisions made for things they didn’t tell us about; like limiting the applications you’re allowed before you’re thrown off the system.”

All types of banks — urban and rural, large and small — were having issues. 

“Today has been very disappointing – especially to the small businesses themselves – because banks nationwide are experiencing major problems with the SBA system,” he said. 

Over the weekend, the SBA continued to clarify and update the rules for the loans, which typically are in the amount of 2.5-times a company’s average monthly payroll. At least 75% must be spent on worker pay within the first eight weeks of the loan in order for the company to qualify for loan forgiveness. 

Companies must count all workers, including part-time workers, in their application — which the SBA mostly limits to small businesses with no more than 500 employees. Agricultural producers, farmers and ranchers are also eligible for the loans as long as they meet certain revenue and size requirements. There are also nearly 800 SBA-approved lenders in Colorado.

The $660 billion should help but it’s far from enough for America’s small businesses to survive and remain intact through the pandemic closures and business limitations, said Alex Padilla, professor of economics at MSU Denver. 

“Small businesses generate about 44% of the US economy,” which is around $23 trillion, Padilla said. “So 44% of $23 trillion, that’s about $10 trillion. That’s almost $1 trillion per month. If the small business package is $600 billion, that’s not even the equivalent of one month for small businesses across the United States.” 

Thousands approved on day one

Some lenders still made progress. Canvas Credit Union, which gained access to the SBA portal too late in the last round, had 400 applications for $20 million ready to submit on Monday.

Lendio Denver, which works specifically with small business owners, said it’s processed 600 applications since round one so it was mostly playing catchup with its backlog on Monday. Only 19 of its loans have been funded, owner Bill Airy said. He’s hoping another 167 get funded by the end of the week.

“Lendio Denver has reached its maximum capacity and is now utilizing partners to assist with the processing, underwriting, and funding of PPP loans,” Airy said in an email. “The PPP Loan process has been the most challenging professional event of my career, including when I was operating three separate businesses, simultaneously, as an entrepreneur.”


Over at InBank, which has locations in Denver and Trinidad, and in New Mexico, 140 loans valued at around $20.7 million have been processed since round two began at 8:30 a.m. on Monday. That translates into 2,047 jobs, said Brian Kreps, InBank’s director of private and retail banking.

His advice for those still seeking a loan? 

“Business owners should be prepared with updated financial statements, including IRS forms 940 and 941, average payroll expense for the last 12 months, number of employees, and (be) engaged with a bank that can help you navigate not just the PPP loan process, but also the potential business challenges and opportunities ahead,” he said in an email. 

Added Jenifer Waller, president of the Colorado Bankers Association, small businesses need to be patient and prepared. If you haven’t found a lender yet, she said, some of the association’s 131-“member banks have told us they are now accepting applications from new customers.”

By 1:30 p.m. on Monday, Carranza  said the SBA had processed more than 100,000 loans submitted by 4,000 lenders. The value of the loans approved was not immediately available.

Update: On Tuesday, April 28, SBA officials announced that as of 11 a.m., 475,000 loans valued at $52 billion have been approved.

This story was updated at 2:55 p.m. on April 28, 2020 to include the latest loan approval numbers.

Paycheck Protection Program, the 7(a) loan

The basics: Small businesses operating as of Feb. 15 with no more than 500 workers (there are exceptions) can borrow up to 2.5-times of one’s average monthly payroll costs — up to $10 million. Lenders are able to forgive 100% of the loan because it’s backed by the SBA. To qualify for forgiveness, loan requires:

  • 75% must be used on payroll, which includes rehiring employees and maintaining pay levels; includes offering paid sick or family leave, health care benefits
  • Rest can be used on rent, utilities, mortgage payments
  • If loan is used for other items, interest rate is capped at 1% for amount not forgiven; loan matures in 2 years and can be deferred for six months
  • Must be used within first eight weeks loan is funded

Find a lender:

Other tools: Application form, loan calculation estimate, SBA’s FAQ page, SBA’s PPP page

Read about the Paycheck program in the CARES Act.

Tamara Chuang writes about Colorado business and the local economy for The Colorado Sun, which she cofounded in 2018 with a mission to make sure quality local journalism is a sustainable business. Her focus on the economy during the pandemic...