Here’s why a bank that issued PPP loans says some Beaufort Co. data may be inflated by $2M
A Small Business Administration computer platform that read cents as dollars may have accounted for what some local business owners called highly inflated loan amounts in federal data detailing a program designed to help them weather the coronavirus pandemic.
Questions remain, however, about how the misread data potentially ended up on a list of loan recipients made available to the public earlier this month.
Several Beaufort County businesses that received Paycheck Protection Program loans through Boston-based Radius Bank cried foul after the data was published online July 6, saying their reported loan ranges were wildly inaccurate.
A spokesperson for Radius Bank on July 10 told The Island Packet that an input error occurred when some PPP loan applications were uploaded into a federal records system earlier this year.
But the bank had quickly fixed those mistakes, the spokesperson said.
The $660 billion PPP was included in Congress’ $2 trillion CARES Act, a massive economic relief package passed in late March as lawmakers raced to mitigate the financial fallout of the coronavirus pandemic.
The PPP loans are forgivable and were established to help small business owners cover mortgage or rent payments, payroll costs or employee retention.
The Small Business Administration and U.S. Treasury Department published a list of businesses in early July they say received a PPP loan of $150,000 or more. The data accounted for some 75% of the funds released through the program but was just a small fraction of the total loans.
Five businesses in Beaufort County quickly contested their reported PPP loan ranges last week.
All of those businesses obtained loans through Radius Bank.
E-Tran errors
Radius Bank had asked potential PPP borrowers to fill out the SBA’s PPP application, Form 2483, and a separate bank-specific online form when applying, spokesperson Kathleen Barrett said.
Some customers, however, added cents to the bank’s form when that wasn’t needed, she said.
When those forms were uploaded into the SBA’s Electronic Loan Processing platform, or E-Tran, the SBA system read cents as dollars, meaning extra zeros were added to some requested loan totals, Barrett said.
“We quickly noticed that there was a mistake,” she said.
The bank was able to compare Form 2483s to the records in E-Tran and fix most of the errors within a few hours, she said.
Radius Bank has since contacted the SBA to figure out what happened on July 6 with the PPP data, which the five businesses say is riddled with incorrect information.
“We are proactively reaching out to the SBA as we learn of these instances,” Barrett said, adding that she had no update on the bank’s outreach as of July 10.
The loan amounts on borrowers’ PPP loan notes are correct, she said.
An SBA spokesperson this week didn’t respond to a set of detailed questions about the Radius Bank issues, including whether federal officials planned to re-release the PPP data.
Instead, in a statement Tuesday the spokesperson wrote that the SBA Office of Capital Access and the Treasury Department are “working diligently to respond to each case of discrepancy in the Paycheck Protection Program.”
Radius Bank loans being contested
Among the Beaufort County businesses contesting their loan amounts:
Citadel Electric LLC is listed by SBA as receiving between $2 million and $5 million from Radius Bank on May 4.
But reached by phone in early July, owner Nathan Thomas said the PPP funds were used to cover payroll for the company’s two employees. He added that the SBA data was wrong: His company received a loan of $12,500, he said.
“I wish I got $2 to $5 million,” he said.
Ellis Construction Co. Inc is listed by SBA as receiving the same amount, also from Radius Bank, on April 30.
But owner Marc Ellis told The Island Packet he is contesting the SBA report of his loan. He did not specify how much money his company received, but said the loan amount was under $150,000.
Hilton Head Comedy Magic Cabaret is listed as receiving between $2 million and $5 million from Radius Bank on April 27.
Club owner Kelly Pollock said the club’s actual loan was under $35,000.
The club closed on March 16 and has yet to reopen, according to its Facebook page. Pollock said the loan money, which took five weeks to arrive, helped pay the club’s nine employees.
Memory Lane Portraits on Hilton Head is listed by SBA as also receiving between $2 million and $5 million on April 15.
Stephen Dey, who said his studio has two full-time employees, said his actual loan amount was between $10,000 and $30,000.
He declined to provide documentation of the specific loan amount in early July, but the Charlotte resident said the loan helped keep his small business alive.
“The loan was extremely helpful. We’re all floundering,” he said of small businesses. “To receive the funds and to put somebody back to work was extremely gratifying.”
He said his employees were furloughed from mid-March until mid-May, when he received the loan.
Dey said he was originally working through his local bank but was transferred to Radius Bank because the loan application volume was so high.
SCDLW LLC was listed as receiving the same amount from Radius on April 27.
The company’s owner said the loan amount was wildly inaccurate in early July.
The only other firm in the $2 million to $5 million loan range in the county which got a loan from Radius Bank, EVS Brokerage Services, declined to comment on the loan.
This story was originally published July 16, 2020 at 7:00 AM.