Personal Finance

'I don't know how small businesses are doing it': One owner's struggle to apply for a loan

Key Points
  • The loan application for small businesses hurt by the coronavirus pandemic has been described as a simple, two-page form. 
  • In reality, the process can be wonky and requires a trove of documents. 
  • "I don't know how small businesses are doing it," said Israel Shaked, who owns a consulting firm in Boston. In the meantime, he worries about the future of his 40-year-old business. 

Ten days after banks began accepting loan applications from small businesses hurting from the coronavirus pandemic, Israel Shaked was still trying to file his request.

"The process is very, very lengthy," said Shaked, who is the owner of a consulting firm and a finance professor at Boston University. He's trying to secure a $200,000 loan from Bank of America.

"There's very little guidance," he said. "I don't know how small businesses are doing it." 

As part of the historic $2.2 trillion stimulus package Congress passed at the end of March to grease up an economy under near lockdown, there is a $349 billion pot of money from which small business owners can apply for forgivable loans to hopefully keep their employees paid throughout the crisis. The funds, available on a first-come, first-served basis, were supposed to be easy to apply for, through a simple, two-page form

Israel and Varda Shaked
Source: Israel and Varda Shaked

Yet Shaked said the process has been anything but straightforward and has taken him and his wife, Varda, days to complete, as they struggle to locate documents and navigate cumbersome online platforms. His frustration with the application is surely being felt by millions of other business owners across the country who are eager for quick financial relief to help prevent their having to lay off scores of workers or close their doors for good.

"There was a lot of expectation that these loans would be facilitated quickly," said Holly Wade, director of research and policy analysis for the National Federation of Independent Business.  

In reality? "We've heard from a number of small businesses that are running into a lot of problems just in the application process." 

Those delays could be disastrous, Wade added. In a recent survey by the association, half of small businesses said that, under current economic conditions, they wouldn't survive more than two months. 

"We are working closely with clients to gather the information required by the government in order to process applications," said Bill Halldin, a spokesman for Bank of America. He added that the bank has published a list of questions and answers on the process to help guide small business owners. 

He's a professor. She's a scientist. Both were confused 

On April 3 –"the very first day it was available" – Shaked applied with Bank of America for one of the new small business loans. Everything seemed to be going well. 

"The way they presented it, I thought it was going to be a piece of cake," Shaked said. 

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The pandemic has hurt his consulting firm, The Michel-Shaked Group, which has been around since 1980. 

"It's as if someone put all business in the freezer," Shaked said. He applied for around $200,000 from Bank of America, mainly in the hopes that he won't have to lay off any of his 20 staff members. 

"Employees are like members of our family, and you don't furlough members of your family," Shaked said. 

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Yet a few days after he submitted that initial application with Bank of America, he received a request for documents from a company he'd never heard of: Intralinks. Without knowing anything about that company, he worried about uploading his sensitive financial data.

"I saw lots of chatter on the internet, somebody saying, 'I went to Bank of America and got another company. Is it fraud?'" Shaked said.

Halldin, the spokesman for Bank of America, sent a link to a webpage explaining the bank's relationship with Intralinks, but it's clear it could be hard  for someone to find this information on their own. 

Concerned about the future of his firm, Shaked proceeded and filled out the forms with Intralinks. 

When he was finished, he noticed another problem. "There was no place to press submit," he said. 

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He called for his wife, Varda, a computer scientist who spent two decades developing artificial intelligence systems.

She was stumped, too. Nearly three hours later, the two of them figured out how to submit the application. They needed to save the documents first and then re-upload them in another place. On its webpage about Intralinks, Bank of America explains this 10-step process. 

Still, Shaked was on edge. The application required that he submit a tax form that he didn't have access to from his house in Brookline, Massachusetts. "If you don't leave home, and these forms are at the office, how do you get it?" he said. 

Eventually, he found a way. He asked ADP, the payroll processing company, to mail the form to his house. That, however, cost him days. Even now, Bank of America is requiring tax information for 2020 that Shaked said ADP hasn't prepared yet. 

In the meantime, he submitted his application and is hoping it will get the green light anyway. 

"This is a race," Shaked said. "Every day, they're talking about how fast the funds are going. We don't know if we're too late."