Enterpreneurs and their advisors describe the 'scramble' of applying for federal funding as they fight to stay in business, and the bright spots that helped them survive

• Many business owners who applied for funds through the most recent stimulus package — the Coronavirus Aid, Relief, and Economic Security (CARES) Act — have yet to see any cash.
• Business Insider spoke to entrepreneurs who attempted to navigate the process — and the experts who donated their time to help them.
• Many said that getting aid was held back by technological and paperwork malfunctions, and that the banks administering the funds weren't ready for the enormity of this job.
• But there were bright spots, such as an abundance of online expert advice and the help some received from local bankers, many of which were long-term relationships.
• Visit Business Insider's homepage for more stories.

On paper, it sounds promising that the federal government's relief plan allocated $360 billion in a desperate attempt to keep small businesses afloat, but many entrepreneurs seeking aid said the process of getting funding has proven nearly as frustrating as the crisis itself. And weeks, going on months, into being shut down, most said they still haven't seen see any money yet.

Business Insider recently reported that the launch of the federal funding program unraveled in 24 hours through a combination of high demand, conflicting information, and uneasy cooperation between the public and private sector.

We spoke to several small business owners about their experience with the CARES program after it went live on April 3. Here are some of the biggest hurdles they faced.

Confusing guidelines and paperwork and technology problems abound

Drew Johnson, owner of party-boat company Lagerhead Cycleboats in South Florida, was preparing to open a third location in Key West on April 1 when the coronavirus crisis struck right at the heart of his high season. He estimates that he has already lost nearly $200,000 between pre-bookings and last-minute bookings.

"It really hit right at the crux of the season. August to September, it wouldn't have impacted as much as it has. It just crushed us," Johnson said. "We hire workers for this time of year. We have everything set up to maintain this time of year."

When he went to apply for federal funding, he found himself faced with constantly changing application guidelines. "We determined up front that if we had done the disaster loan [the EIDL], that would have just been way too much work and hassle. I'm ready to apply for the other [the PPP], but I'm not going to do it until I get some clarification on the correct way to file. So I'm waiting on answers. No one knows," he explained.

Johnson employs a total of 15 people, only one of whom is a full-time employee, and that's where the confusion comes in.

"We haven't heard back if our part-time employees, some of whom work full-time hours during the season, are covered or not. We want to pay our employees and keep them happy. But as a business owner, I can't just take on $60,000 in debt if I'm not getting anything out of it," he said.

As the cofounder and managing partner of financial services firm Crown Wealth Group in Charlotte, North Carolina, Nick Kolbenschlag has been helping businesses from dentists to dry cleaners navigate what he described as "a scramble."

"The SBA hasn't even made it abundantly clear what information we need to submit. If you think you're going to apply and it's going to be easy, it's not," he said.

Kolbenschlag told Business Insider that since the programs under the CARES Act were announced, he spent hours collating various documents for his clients, only to have requirements change several times.

"Even the application itself changed three or four times. We'd have all the papers signed and done, and then have to send over a completely new set of papers for our clients to fill out and sign," he said.

But the paperwork is just the beginning of the issue — it's a struggle on the technology side as well.

Natasha Miller, president and chief experience designer of Entire Productions, a San Francisco-based events company with $4.5 million in revenue last year that caters to the Bay Area tech elite, started her journey to find relief even before the official programs were announced, striking out to apply for an SBA disaster loan in mid-March.

"On March 13, I applied online for the SBA disaster loan, and that experience itself was a disaster. The website was so outdated, and the language wasn't really understandable," she said. "In fact, I talked to someone in a call center to get help, and she literally said to me, 'You know, a lot of people are calling about this same problem, so just fudge it, and when someone calls back from the SBA, you can fix it then.' I thought to myself, 'Oh no, this is just really not good,' and I just kind of set it all aside at that point."

When they redid the website to launch the new EIDL program, she told Business Insider, it was much easier, "but of course I don't have any funds from it yet," she added.

The SBA did not respond to requests for comment.

Dentist Micheal Wilson, who, with his wife, Kelly Wilson, owns Southview Dentistry in Charlotte, North Carolina, said he spent seven hours trying to submit his documents via PNC Bank's interface on April 5 when it opened up.

"Those hours just raced by," Micheal Wilson joked bitterly. "At least our banker was responsive; he kept telling me he was sorry, and that they were doing their best."

Business Insider was unable to verify that the Wilsons were in fact on the website for seven hours. When PNC Bank was contacted for comment, it said it had put considerable effort toward developing its PPP application process.

"We quickly leveraged existing technology, operational know-how, and the efforts of employees who worked around the clock to build an online portal to accept applications, collect required information, and review applications in accordance with program requirements," PNC spokesperson Marcey Zweibel told Business Insider. "Applications that were missing required information or documentation, or that raised eligibility questions, took longer to process."

The Wilsons, who are both dentists, employ nine other workers, whom they furloughed when they closed their office on March 17.

"We have no real feeling for when this loan will be in underwriting or anything — everything seems to be a moving target," Micheal Wilson said. "We can't go back to work until the first of May right now, so at this point, I actually have some concern about even being able to use the money within the time frame the Act specifies."

Experts are stepping up to share knowledge and advice amidst 'a scramble'

Kolbenschlag explained that businesses that are organized are better prepared to handle the process in the long term, "because not only do they have to submit a lot of paperwork on the front end, but they're going to have to report again in eight weeks on how they used this money in order to get the forgiveness." However, as with everyone in line for these loans, a great deal is out of their hands.

Of course, not every small business has a financial advisor, and many have turned to the internet for help. Some found Wilfred Baptiste, the Yonkers, New York-based principal of independent insurance agency Financial Blind Spot, who's been giving webinars every weekday on the CARES Act since the day it was passed.

As the COVID-19 crisis approached, Baptiste, who sells business insurance, first considered whether a business interruption plan would help protect his clients. After realizing it wouldn't, he sought out a way to become useful. His background as a former loan officer allows him to provide insight from the bank's point of view.

"There's a lot of confusion about the details of this plan," Baptiste told Business Insider. "To give you just one detail that's easy to understand as an example, there's the $100,000 per employee cap. Well, the guidance doesn't specify whether that cap is on salary or on total compensation." Baptiste has aided businesses all over the country after connecting through his webinars.

Aliza Sherman, who owns the communications company MediaEgg LLC out of Anchorage, Alaska, found another source of advice online, Certified Financial Planner Travis Sickle, who virtually helped her through submitting her EIDL application via his YouTube channel — even though she's numerically dyslexic.

"This condition makes it really hard for me to fill out forms and do taxes, so he made it super easy — it took 10 minutes," she said.

At least Baptiste, who, like everyone providing advice at this time, is not allowed under the provisions of the CARES Act to charge for his services in consulting with clients, is getting some benefit from this work.

"These have been two or three of the most fulfilling weeks of my career, because you get to talk to people and really feel like you're making an impact, and I want to believe that it will eventually right itself," he said.

Business owners face tedious application processes and find themselves turned down for funding despite long-term relationships with big banks

It seems that the larger the bank, the less well-informed in the terms and processes of the CARES Act they have been. Miller of Entire Productions, for example, had a real scramble when it came to submitting her application for the PPP.

She had a bank account for her business with First Republic Bank, which wasn't an SBA lender. So she tried to open a new checking account at her personal bank.

"I asked if they could do PPP loans and my banker said yes, but then she found out that she could not," she explained. She was able to submit an application at another bank, but "[t]hen First Republic came back and said they were going to go ahead and do SBA loans, so I went ahead and submitted through them as well," she said.

Kolbenschlag of Crown Wealth Group was just shy of amazed at how lumbering the big banks' response to the CARES Act deployment has been.

Kolbenschlag shared that Truist Bank took the longest to actually bring its application out and made the process hard. "You had to actually individually upload each of the documents and it added a lot of time to submit each of them," he told Business Insider. "PNC's application didn't save and their servers kept crashing. Bank of America took a different route — they just put the SBA application up and basically told people, we're saving your place in line and we'll call you when it's your turn."

Bill Halldin, a Bank of America spokesman, told Business Insider that its application was actually a customized form that was prepared by the bank and intended to pave the way for subsequent collection of required documents.

Truist did not respond to requests for comment.

Additionally, many larger banks are stipulating that applicants must have not only a deposit account with the bank, but also a preexisting lending or credit relationship, in order to apply for assistance.

"I have a client who does tens of millions a year in banking with Bank of America and doesn't have a credit card or any kind of lending relationship, and the minute he put in his username and password they told him he's not eligible," Kolbenschlag said. "He's leaving and he has millions of dollars in deposit accounts there. That relationship is just over."

On April 4, Bank of America revised its terms so that business banking or commercial banking clients without a business credit or borrowing relationship with another bank are eligible to apply through the bank. Halldin provided a transcript of an April 3 interview Bank of America President Brian Moynihan did with CNBC for further explanation.

"We have a million borrowing customers that we're trying to get through the system first, then our second priority will be the customers who have the core operating account with us but don't borrow anywhere," Moynihan told CNBC. "So my advice to customers is if you borrow from us, you can apply on the application. if you have all your relationship with us, but don't borrow, the relationship managers will handle that. But, if you borrow with another bank ... please, go back and work with them because they're your core bank and they know you the best and can process you the fastest."

Wells Fargo told customers to consider applying through other other banks due to its backlog of requests. Wells Fargo spokesperson Manuel Venegas highlighted to Business Insider the bank's website outlining qualifications for the PPP program, as well as its official statement on the matter.

"That's going to leave a lot of people out in the cold," Kolbenschlag said. "Although, at some point, I guess it's just doing people a disservice, when they know they've already got way more applications than the money they can reasonably lend."

Mike Wallen, of Highland Tax Resolution, a two-man shop in Denver, Colorado, managed to get his firm's information submitted for the PPP to Wells Fargo just under the wire.

"Wells Fargo said if you're interested, please keep in touch, check back, and that was April 3. I monitored it closely on Saturday and on Sunday, I finally got a link to the application," said Wallen, whose April revenue is off by about 65% because of the pandemic. "It was only three questions: What's your business name, what's your EIN, and how much funding are you seeking? I got an email back stating, 'We got your application, but we encourage you to look elsewhere, because we're expecting our funding to dry up.' Sure enough, they closed down."

Cheryl Coniglio, who with her husband owns C&C Supply Company, an industrial welding and safety supply business in Woodbury, New Jersey, wasn't so lucky, even though her family's business has banked with Wells Fargo throughout its 30-year history.

"I made a point of being very diligent about staying on top of things, being very proactive, working with my CPA to pull everything together to have it ready for the bank," Coniglio, who had been pressing her banker for information for weeks, told Business Insider. "The first red flag was he didn't know what was going on, that he wasn't being informed from corporate about what was going on, which was shocking."

Coniglio reached back out on Friday when the program when live, but her banker advised her to check back on Monday. Instinct led her to keep monitoring the website over the weekend, and sure enough, things had changed.

"There was a form, and it had my name pre-filled, and just asked for my company name and my email address. It wouldn't accept my company name after repeated attempts, so I sent an email through the help desk, and I sent an email to my banker, making it very clear that I wanted to participate in this program," she shared. "But then on Monday, I opened up the news to see that Wells Fargo had closed down the system."

"To say that this is a huge slap in the face is an understatement," added Coniglio, who employs 15 people and whose business has been able to continue operating with some modifications.

Wells Fargo spokesperson Venegas declined to comment on Ms. Coniglio's situation.

Wells Fargo stated that it closed applications because it had reached the $10 billion asset cap assigned to it because of prior financial mismanagement. When the Federal Reserve decided to modify this asset cap to allow for more lending, the bank was too far behind and advised customers to look elsewhere.

Of course, there are exceptions to every rule. Leslie Nilsson, of Bartleby & Sage in Brooklyn, New York, told Business Insider that her experience with Chase was positive, even when their readiness to accept applications was delayed.

"Chase gave me good customer service," she said. "I sincerely think everybody wants to do the best they can, because we really are all in this together."

Service at the smaller banks shines

Where there are positive stories to be told, it's in the service smaller banks are providing their customers.

Tim Toppen, whose family is the Tide Dry Cleaners franchisee in the Raleigh-Durham, North Carolina, area, applied for the PPP loan through his bank in Louisville, Kentucky. The timing was also good for Toppen, whose business is off 60% to 80% since this crisis began. He'd also taken out an SBA loan with First Savings just six months prior in order to acquire his second location, meaning the bank was highly acquainted with him and his business.

"I think one of the keys in this thing is having a banking relationship with someone, because then you can know what they need, the process at that bank, and then of course, knowing the right parameters to calculate the loan you need," Toppen told Business Insider.

Heather Manley owns two small businesses in the Minneapolis, Minnesota area and said the bank she uses for her tech company, On-Demand Group, "was definitely on the ball sharing info, timelines, and all the information we needed."

"For me, what was more exhausting was the three webinars I sat on every day for about a week as this program chameleoned by the hour into something new. There was so much information, panic, and misinformation — I'm sure it was incredibly overwhelming for many," she told Business Insider. "In comparison, my bank, Highland Bank — they were awesome."

Manley's banker at Highland, Melissa Johnston, explained that her bank is "right in the sweet spot between big enough and not too big." Highland is in the $500 million asset range, so was large enough to have a dedicated SBA team, into which it surged additional employees from elsewhere in the bank to grow its capabilities and narrow its response time.

"We're nimble enough in our size, with a client base in the hundreds," Johnston, a senior vice president of commercial banking, said. "It enables us to have messaging within our team that's consistent, and we can manually go in and enter all of our clients' information for the SBA in a manner that's consistent."

Johnston identified communication as another strength of Highlands' approach. "From the very beginning, our SBA manager, Kim Storey, participated in three to five educational updates per day, including webinars and teleconferences, so that we could communicate with our customers and let them know what we knew via seminars and emails hosted by Highland," Johnston told Business Insider. "We put a priority on getting the answers out."

Highlands' approach had results, as well. "Our program rolled out on Friday and we literally had Heather's company approved on Saturday morning," Johnston said.

No real relief in sight

Treasury Secretary Steve Mnuchin continues to give briefings that speak of "same day" funding. Things are very different for business owners on the ground: One thing they all have in common is the sense of having no idea of what comes next.

Highland Tax Resolution's Wallen said that he appreciates that the government is working hard to put these solutions together, but when he considers the scope of the challenge at hand for the banks — the actual processing of all of the applications — what he'd appreciate most is some real talk about what's next.

"Everyone is thinking of these problems from a day-to-day standpoint, and it requires a lot of patience from business owners," he said. "If the banks could just give us an idea as to what the time lapse is and give us some kind of realistic expectation as to when we might actually expect to see some money, that would be very helpful."

Aliza Sherman of MediaEgg LLC, who applied for the EIDL, is pragmatic about the situation, taking the point of view that she and her family are fortunate as compared to others hit harder by this crisis

"At the end of the day, the possibility of getting a grant is a relief, to think that I can keep my nostrils above water," she said. "Or maybe it's more of a snorkel, because I really feel like I'm under water, with mounting debt and no influx of revenue. I tell my family, 'Roof over your head, food on your table, and you have your health.' It's really a luxury."

When asked about the prospect of "money in your pocket the same day," Lagerhead Boats' Drew Johnson took a deep breath. "I do think that is [Mnuchin's] intention, I do think that is what he and the rest of the legislators want, but I think that is just an unrealistic expectation," Johnson said. "I'm not going to hold my breath that that's what's going to happen."

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