Federal coronavirus relief program helps thousands of Maryland businesses but leaves others out as funds run dry

Like many small business owners facing damaging losses, Drew Pumphrey jumped at the chance to apply for a forgivable loan through the federal Paycheck Protection Program designed to offer relief from the impact of the coronavirus pandemic.

The sole proprietor of the Smoking Swine food truck submitted “every application I could fill out,” he said, working with Wells Fargo Bank, Bank of America and Kabbage, a small business lender. But a lack of guidance and no word from lenders has left him frustrated, especially now that the $349 billion program ran out of funds.


“I know general accounting and how to make barbecue," said Pumphrey, who estimates he’s lost 90% of sales since his customers at office parks started working from home. "I don’t know how to apply for grants. I’m just trying to save my business here.”

Matt Reade, the chief financial officer at the 300-employee, 50-year-old Bakery Express in Halethorpe, had a nearly opposite experience. A loan approved just days ago will allow him to continue paying an already reduced work force and could mean the difference between the commercial bakery staying open or closing for good.


“It’s been a crucial lifeline for us to weather the storm and push through this period of low volume and short cash flow,” Reade said.

Bakery Express was among thousands of Maryland small business helped by the program, part of the $2 trillion coronavirus aid package passed by Congress. But thousands others have found themselves cut off as funds ran dry.

On Thursday morning, shortly after 11 a.m., the Small Business Administration stopped accepting applications from banks.

Congress is considering a new appropriation, and banks say if that happens, they are prepared to quickly submit pending applications on a first-come, first-served basis.

“We’ve never experienced such an unprecedented volume of assistance requests at one time,” said Rachel W. Howard, a spokeswoman and economic development specialist in the SBA’s Baltimore district office, in an email. “The existing infrastructure wasn’t built to handle this level of activity. SBA has worked around the clock to improve the processing software and to streamline the process.”

Howard said the SBA expects to release lending statistics by state next week.

M&T Bank said Friday that 96% of its eligible applicants were approved. In the Baltimore market, M&T funded 6,600 loans totaling more than $1.3 billion.

It managed the huge volume of applications by assigning nearly 2,000 workers, front-line bankers, branch managers, back office staff and others across all of its markets, to work on processing loans, said Augie Chiasera, M&T’s regional president for Greater Baltimore.


“We trained individuals very quickly in how to do the work, and they delivered in a big way,” Chiasera said.

The bank also delayed opening its online portal for applications until April 6, rather than the day the federal program launched on April 3, to “make sure we would come out with an automated solution that would work, where clients could upload documents and data," Chiasera said.

“Right now,” he said, “we’re in process of getting out notes and documents to clients so we can process the funds into their accounts.”

Howard Bank, based in Baltimore, approved more than 700 loans, most that applied, totaling $180 million, said CEO Mary Ann Scully.

Scully credits the bank’s high approval rate, in part, to its decision to use a manual rather than automated process to send loan documents from its customers to the SBA. The bank had 40 employees manually entering data into the SBA system.

By doing so, the bank avoided slowdowns that some other lenders encountered in the automated system.


“We didn’t have an automated front-end for the SBA,” Scully said. “Some that did have a front-end, their system crashed because of the volume. So ironically our decision to not try to deploy that ended up helping us.”

It’s unclear how many loan applicants are caught in limbo — having applied to a lender but not in time for documents to be forwarded to the SBA before the portal closed.

A survey of 21 community banks in Maryland found that 4,883 applications were pending or in process when the SBA closed the program to its authorized lenders. Those applications represent a combined $665 million in loans to businesses that employ 17,389 people, according to the survey by the Maryland Bankers Association.

“Without further congressional funding, thousands of Maryland businesses and their employees are at risk of not being able to benefit from the much needed payroll relief," said Kathleen Murphy, the group’s president and CEO, in an announcement Friday. "Banks are anxiously waiting to upload thousands of pending applications once new funding is signed into law.”

Members of Maryland’s congressional delegation also are among those calling for swift action, including including increased funding and legislative fixes to make the loans more flexible.

“I hear daily from local businesses across Maryland about roadblocks to loans and delays in receiving funds," said Sen. Chris Van Hollen, a Democrat, in a statement.


On Friday, Annapolis-based Frost Law filed a class action lawsuit on behalf of a jewelry designer and a financial services adviser against the SBA arguing that the Paycheck Protection Program was discriminatory — since a larger percentage of minority- and women-owned businesses make up the sole proprietor category. While the loan program opened to small businesses on April 3, sole proprietors, with no employees, were not eligible to apply until April 10.

The later deadline for sole proprietors “essentially boxed out these businesses from even participating in the program,” said Matthew Kraeuter, partner of Frost Law.

After the initial application deadline, “larger businesses flooded banks,” said Glen Frost, managing partner of Frost Law.

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Banks, in turn, prioritized larger clients, leaving less money available for mom-and-pop shops like his clients — Infinity Consulting Group LLC in Fort Washington, which does business as Glitz & Glam Jewelry by LJ, and Alvin Vaughn of Silver Spring.

Pumphrey, whose food truck has been featured on the Food Network show “Diners, Drive-Ins and Dives,” was among those applying at the later date as a sole proprietor. Besides losing his office park business, he has had to delay the opening of a brick-and-mortar restaurant in Brooklyn.

But even larger small businesses found themselves shut out.


Tony Foreman helps run one of the largest restaurant groups in Baltimore. But so far, that hasn’t helped his Foreman Wolf group procure a loan through the program. The money would help rehire 250 employees laid off after the state ordered restaurants closed as gathering places to stem the spread of the pandemic.

Foreman has yet to see any money.

“I have to expect that nothing is going to come and hope that something is coming,” he said.

In the meantime, he and remaining staff are preparing weekly grocery handouts for the company’s unemployed workers. Foreman said the company is also covering COBRA payments for laid-off workers to ensure they have health coverage.