Gov. Bill Lee pushed a federal paycheck protection program Tuesday, April 7, for small businesses as well as relief for independent contractors who can qualify for unemployment during the COVID-19 pandemic.

The governor made the announcement after saying previously he was uncertain if the state would participate in the program.

State Sen. Raumesh Akbari, a Memphis Democrat, called on the governor’s administration to start distributing unemployment benefits to self-employed people hurt by the crisis as soon as possible.

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“It would be unconscionable to even consider cutting self-employed workers out of economic recovery assistance. Some of these workers haven’t earned a dime in three weeks,” Akbari said in a statement. “Congress approved money specifically to help these vulnerable workers through this crisis and our state should not delay any longer in distributing these funds to qualifying families.”

The statement came after Lee said Monday he had not made a decision to follow federal guidance on the matter. The federal government had published an unemployment letter Sunday, April 5, saying self-employed workers, independent contractors and gig workers, those who work on websites and mobile apps, would be able to get 39 weeks of benefits retroactive to Jan. 27.

Nevertheless, Lee said Tuesday those funds will be rolled out as part of the CARES Act.

More than 100,000 people applied for unemployment in March after the government shut down portions of the economy. The state is projecting it will pay more than 100,000 claims this week.

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The state Department of Financial Institutions started the paycheck program last Friday for businesses with fewer than 50 employees that keep workers on the payroll for eight weeks during the crisis. They could receive up to $10 million each.

“Small business owners across the state have borne a tremendous burden to be a part of slowing the spread of this virus,” Lee said.

Many small businesses, such as restaurants, barber shops and nail salons, were forced to shut down because they’re deemed nonessential or to offer curbside service only, cutting into their business revenue.

Congress approved nearly $350 billion as part of the CARES Act to go toward Small Business Administration loans, which can be forgiven as long as long as at least 75% of the money is used for payroll expenses. Treasury Secretary Steven Mnuchin is reportedly planning to ask Congress for $250 billion more.

Financial Institutions Commissioner Greg Gonzales said Tuesday Tennessee’s banking system is “strong,” in fact, in better shape than it was before recession struck in 2008.

He pointed out the payroll protection program took effect just three business days ago.

“So there’s still a lot of work being done to make it fully functioning,” Gonzales said, calling the program an “unprecedented” type of assistance.

“Working in partnership with the federal government, Tennessee banks are doing everything they can to process loan applications quickly. But businesses should expect it will take some time for the program to be fully functioning,” he said.

The state had to wait for federal approval to access the system, and as a result some applications couldn’t be process until this week, Gonzales said.

“But we are seeing results. The banking industry is working directly with Treasury” and federal senior staff to address system changes that arise, Gonzales said.

In spite of being as “streamlined as possible,” and to make borrowing efficient, banks will need to verify their customer’s identity and require payroll information for a loan application, he said.

Asked about problems stemming from numerous changes by the U.S. Treasury Department, Department of Financial Institutions spokeswoman Alica Owen said, “It is true that the program has made many changes over the last few days, but banks seems to be adapting to these changes.” 

Owen called it a “significant challenge” for the Small Business Administration to put the program together and push it out in such a short time. She could not speak to problems with specific banks, but she said the banking system has reacted “quickly and strongly” to the magnitude of the situation as well as the challenges of gaining access to the federal system and working through its guidelines.

She noted thousands of applications have been filed and some have been funded.

Said Gonzales, “I have been on phone calls every day for some time and all I am hearing is that banks are eagerly wanting to engage in this.”

At the same time, the state is being overwhelmed by the number of claims coming in since the crisis started.

Tennessee Department of Labor & Workforce Development Commissioner Jeff McCord said the state is adding another 50 people so the office can handle claims seven days a week.

The department agreed to participate in the CARES Act Pandemic Unemployment Assistance program, which covers sole proprietors and 1099 independent contractors. Another program is called Federal Pandemic Unemployment Compensation, which will stack $600 on top of any state payment the filer receives. Those payments are supposed to be backdated from the time of the agreement, he said.

The state received guidance from the federal government this week and should have more information in the next few days on the start date.

“We understand time is of the essence. We feel like this is a huge wave and a huge emergency at the department to get these funds out and get these benefits out to Tennesseans,” McCord said.

Also Tuesday, 30 faith, labor, environmental and community organizations sent a letter to Lee asking him to take steps along with mayors, utility regulators and electric cooperative leaders, to put a moratorium on utility cutoffs for water, electricity and telecommunications. The group also called for waivers on late-payment charges as the COVID-19 crisis grips the nation.

Asked whether he would take action, Lee said he believed the Tennessee Public Service Commission had announced previously it would not turn off utilities during the pandemic, but he wasn’t certain about the extent of that decision.