There’s happiness and heartbreak over Paycheck Protection Program funding in Wichita

Creative Paradise owner Stephanie O’Toole proactively called Emprise Bank when she heard Congress approved $349 billion through a Paycheck Protection Program to help small business owners.

“The kid I talked to didn’t even know about the program, it was so early on.”

Then she filled out an SBA application, submitted it and financials to Emprise and thought, “OK, good, I’m in the front of the line.”

But as other Kansans got help — there were 26,245 loans totaling almost $4.3 billion statewide — O’Toole is still waiting.

“I’m, like, pitchforks and torches mad about it. It smells so rotten.”

She’s not the only one.

Most people by now have heard stories of big companies nationally getting loans that Congress intended for small businesses; but what happened in Wichita, and what’s likely to happen now that Congress has approved another $310 billion in funding for the program?

“It worked in many instances,” U.S. Sen. Jerry Moran, R-Kansas, said of the program, “and my job now is to help those who fell through the cracks.”

Smaller banks and credit unions seemed to have a higher success rate at processing and funding applications.

“They did a much better job than the bigger banks,” said U.S. Rep Ron Estes, R-Wichita.

Estes isn’t blaming bigger banks. He said they simply had a tougher time.

“Smaller banks can be more nimble.”

For instance, Community Bank of Wichita funded all 83 applications it received for a total of $8.7 million, with the highest loan being $557,000 and the lowest $3,100; Conway Bank processed all 67 applications it received for a total of $5.85 million; Carson Bank funded 125 of 150 applications for a total of about $10 million, with the average loan being $60,000; Halstead Bank funded nearly all its 118 applications for a total of $7.3 million; and Chisholm Trail State Bank funded all of its 102 applications for a total of $15.1 million.

“The approval process was almost instantaneous,” said Chisholm Trail president and CEO Cuy Mauck. “It was honestly probably one of the best government programs I have seen.”

At Emprise Bank, which is the fourth-largest bank in Wichita, with an almost 8% market share, there were particular problems related to a third-party processor, Atlanta-based Kabbage. Many were left frustrated — and without money.

No one with Kabbage returned an e-mail for comment.

Emprise chairman and CEO Matt Michaelis won’t answer questions about numbers of applications or funding. In a statement, he said that “it was critical to augment our capacity with additional avenues for small businesses to complete applications and get in the queue for the SBA funding.”

“This approach, combined with working nights and weekends, helped more applicants receive funding during the first round than would otherwise have been possible.”

In O’Toole’s case, after she applied through Emprise, she then was told she had to go through Kabbage.

“So I had to start all over.”

She received an e-mail response saying Kabbage needed more information, but it didn’t tell her what to provide. Her banker told her to keep checking the site, so every day O’Toole logged in.

“It was like torture.”

Creative Paradise, which makes ceramic and glass molds for artists, has 14 employees. O’Toole said she doesn’t want to lose any of them and is continuing to pay their salaries even though they’re not working because of the coronavirus outbreak, so she needs the money the forgivable loan would provide.

Finally, Kabbage told O’Toole to “send us your organizational documents.”

O’Toole said she had no idea what that meant. In the middle of trying to send more documents, her scanner broke, and then she slipped in a puddle of Lysol she’d been using to disinfect her shoes, broke a toe and was convinced she must be in an episode of Punk’d.

“I’m like, can this be real? Is Ashton Kutcher going to be coming around the corner at any minute?”

O’Toole said she appreciates the help her Emprise bankers tried to provide, along with help from Moran’s office, but it was too late.

She has been told she’s now in line for the next round of money.

Broken trust

Intrust Bank had a number of disappointed customers, in part probably because of the volume of applications it had as the largest bank in Wichita, with an almost 23% market share.

“I’d like to say that this process was perfect, but quite honestly, it was a program that was being created in real time,” said Intrust president and COO Jay Smith.

Intrust Bank had 1,470 applications as of April 15, 1,200 of which were filled for a total loan amount of almost $500 million.

Some Intrust applicants said they never heard a personal reply from the bank until after the money ran out.

“It’s been zero communications,” said nurse practitioner Deborah Murphy. “I think Intrust never did anything with my application.”

She said she tried contacting Intrust every day and thinks the bank “could have given me at least a phone call or at least something” other than an automatic reply.

Murphy and her psychiatrist husband, Paul, have a practice together and have four employees.

Though she said she knows Intrust had to be overwhelmed, Murphy said she can’t help feeling like the bank “gave all the money to the big guys. It’s just disgusting.”

She said she’d like to ask Intrust, “Did you even look at any of those applications or did you just pick the ones that were your friends and sent those?”

Smith said the median size of the 1,200 loans was $100,100. He said 14% of the authorizations were in amounts less than $20,000.

When asked about the top-end loans, Smith said, “I’m not going to speak to any specific number.”

When pressed if there were any $10 million loans — the maximum allowed — or any approaching that, Smith said, “We did do loans approaching that number.”

He said it’s part of Intrust’s culture “to treat everyone fairly.”

Through its Paycheck Protection Program portal, Smith said the bank responded to more than 2,000 questions from applicants.

“We’re effectively doing a year’s worth of activity in a relatively few weeks.”

Some Intrust customers were both happy and disappointed all in the same family.

Bill and Marilyn Ramsey have multiple Intrust accounts for various businesses.

Bill Ramsey said he’s happy his wife’s River City Sweet Shop received a loan “because they were the ones that were in most dire need.”

However, he said he’s frustrated that his multiple uBreakiFix store applications were never processed.

“I fully realize they were inundated. This is unprecedented.”

Ramsey said he’s in better shape than some mom-and-pop shops, but “if we were in worse shape, I’d be highly irritated.”

Across the board, applicants nationally who fared the worst were sole proprietors and independent contractors because the rules for their applications weren’t solidified until days before the money ran out, the SBA and bankers said.

Dee Clark said she and her husband were left thinking, “It must not be for little tiny businesses like we are.”

Clark has a one-person barber shop in Normandie Center. Her husband has a shoe repair store next to her business.

“We’re running out of money,” Clark said.

Though she’s behind in her mortgage, Clark said her more immediate need is food. She said she called Gov. Laura Kelly’s office to say that soon she will have no choice but to break her stay-home order and open her business.

Clark, an Intrust customer, is so demoralized that she said she feels she has no hope for the next round of funding.

“I don’t feel like we’ll ever see a dime of it.”

Smith said the program was underfunded and that estimates put the total needed amount at more like $1 trillion.

“We want to be part of this solution, and we’re going to do our darndest to do that.”

He said employees worked late, on weekends and even on Easter to get loans processed.

“I hate that we have folks out there that feel otherwise.”

‘Valid concerns’

It appears that the biggest beneficiary of the PPP loans nationally is a hotel company that counts Wichita’s Courtyard by Marriott Wichita at Old Town as one of its properties.

According to a New York Times story, Dallas-based asset management firm Ashford Inc. advises a couple of real estate investment trusts, Braemar Hotels & Resorts and Ashford Hospitality Trust, and they received a total of around $53 million for their 100 properties.

The Courtyard by Marriott Wichita at Old Town received almost $200,000 in the loans through Cleveland-based KeyBank.

Calls to the Marriott were referred to Ashford, and no one with Ashford returned an Eagle call or email about the loan.

“There probably are valid concerns and valid issues behind some of these things that are now coming out but . . . we don’t know enough about the details,” said Wayne Bell, director of the Wichita District of the Small Business Administration, which includes 77 counties west of Shawnee County.

“Anytime you have a national program like this that was stood up as rapidly as this one was with the best of intentions . . . things can be exploited in a way that wasn’t originally intended,” he said. “You know, it’s unfortunate.”

Bell said he’s certain the situations will be addressed as they continue to come out.

“The intent of this was . . . to help small businesses that had employees, to help them bring their people back to work so those folks could get a full paycheck and not continue to receive unemployment benefits,” Bell said.

He said the goal was to help rural and minority businesses and “these smaller Main Street businesses that desperately need help.”

Bell said the SBA typically does $30 billion in loans a year, so the most rapid way to get help distributing such a larger amount of PPP loans was through banks.

He said the “SBA dealt with the lenders in good faith that the lenders would . . . do these loans really on a first-come, first-served basis.”

Opportunity and camaraderie

Intrust public relations manager Nate Koch said it’s difficult to compare numbers locally and nationally due to procedural differences in how they were administered.

In an email, he said he thinks the real story is the dedication of so many bankers “putting in intense days, nights, and weekends...learning and innovating on the fly to help support small businesses in a time of unprecedented challenge. All in the hope of assuring millions of jobs will be there for Americans when we emerge from this pandemic.”

Jane Deterding, chairman of Citizens Bank of Kansas, said bankers were helping fellow bankers through the ordeal.

“There was so much camaraderie,” she said. “It was great.”

Citizens funded 190 loans out of about 240 applications for a total of more than $17 million.

Some banks did not loan to noncustomers, but 23 of the Citizens loans went to people who do not bank there.

“For us, it was an opportunity, quite frankly,” Deterding said. She said the hope is “to turn that into a full-fledged banking relationship.”

Kansas City, Mo.-based Commerce Bank proactively called 9,800 of its customers across the region to prepare them before the application process opened. Once it did, it was too hectic to differentiate between customers and noncustomers, so it was first come, first served, said Monte Cook, president and CEO of the Kansas region.

“That was why it was so important that we educate our customers up front,” he said.

The bank didn’t break out Wichita numbers from its total in the Midwest. It funded more than 4,500 loans in the first round, but it won’t say how many applications it received. The loans totaled $1.5 billion and had a median size of $64,000.

Other financial institutions had a range of success for funding applications.

Credit Union of America funded 62 of 150 applications for a total of about $1 million; Meritrust Credit Union funded 171 of 308 for a total of $11.3 million; Southwest National Bank funded 194 of 197 applications for a total of $19.1 million; and Legacy Bank funded all its 285 applications for a total of $31.2 million.

Halstead Bank president and CEO Alex Williams said it “was a Herculean task to try to get that much money into the hands of small businesses” and was more manageable for banks his size.

“I’m amazed . . . how the program worked as effectively and efficiently as it did, really.”

Deterding asked her employees to count how many actual workers the Citizens loans helped. It was 2,258.

“That’s a real number, you know?”

Like most banks acknowledging how hard their employees worked, Fidelity Bank executive vice president and director of commercial banking Jeff Ronen said Fidelity employees “knocked it out of the park.”

“Every day equaled about a month, and I’m really not exaggerating very much. I can’t believe what they were able to accomplish.”

Fidelity, which is the third-largest bank in Wichita, with a more than 10% market share, had 350 applications and filled all but 16 of them for a total of about $100 million in loans.

Ronen said the biggest challenge for bankers was “we didn’t have a clear set of rules, and even when we thought we had a clear set of rules, the rules kept changing.”

“They gave us a paint-by-number kit and no numbers.”

Though the intent was to get money to businesses as quickly as possible, Ronen said perhaps there should have been a more “clear set of rules before they released every small business in the United States to go to their bank.”

Deterding said that “maybe they could have reduced the top amount . . . so more mom and pops would have had a chance. I mean, when you have someone getting $10 million out of the kitty, that’s a pretty big hit for one loan.”

Town hall answers

Wichita City Council member Brandon Johnson said he knows of only two black-owned businesses that successfully accessed the PPP loans.

“Minority-owned businesses have always had struggles accessing capital,” he said. “Oftentimes, a minority business seems to be an afterthought.”

Johnson said he’s particularly concerned about sole proprietors and people who have new businesses, which have been difficult to fund because loans are calculated on how many employees businesses had a year ago. He said he’s been hearing from a lot of them.

“It’s been hard to have so many small businesses call me with the issues that they’re having,” Johnson said.

Johnson has been collecting questions for a live Facebook town hall the city is organizing with Sen. Moran to answer loan questions at 3 p.m. Friday. There will be a link on the city’s Facebook page for people to follow the meeting.

Bell, the director of the Wichita District of the SBA, said the best thing for small business owners to do is immediately reach out to their bankers to be ready to process their applications. The process is expected to go more smoothly the second time around, but that also means the money likely will go more quickly.

“I’m certain there are some businesses that felt they didn’t get a chance and somehow they were left out of the process,” Bell said.

He said he hopes this second round corrects that, and he said new legislation will prevent some of the complaints about big companies faring better than small ones.

Even with as big of a headache as the process has been — and as much heartache that was left in its wake — most bankers also are feeling a sense of pride at being able to help so many people in a time of crisis.

Rep. Estes said, “There was actually a lot of success in Kansas in terms of getting those funds out.”

He said the state was ninth in the country in dollars loaned per capita.

Bell said a more-granular report of what each bank loaned will be coming from the SBA in Washington, D.C., soon.

This time of ramping up to help compares to post 9/11, when he joined the TSA, Bell said.

“The difference is this was just nationally around the clock calls and requests for information, congressional inquiries . . . virtually every stakeholder you could imagine was reaching out to us for guidance, for assistance,” he said.

“I deeply, deeply appreciate being a position to help, and I’m glad that we are, and I look forward to us all getting through this.”

Deborah Murphy, the nurse practitioner who didn’t get a loan, predicts not everyone will make it through.

“There will be a lot of people just go under because they didn’t get that money,” she said.

“That’s very sad when they gave it away to those big companies. That wasn’t the intent. Although maybe it was. I don’t know.”

Contributing: Michael Stavola and Jason Tidd.