Seven days after beating the U.S. Small Business Administration in court, Hidalgo County EMS still can’t apply for a Paycheck Protection Program loan — because local banks will not accept the application.

Hidalgo County EMS, a privately owned ambulance company, responds to 911 calls in Edinburg, Pharr, parts of rural Hidalgo County, Jim Hogg County, Jim Wells County, Peñitas and Sullivan City.

“If Hidalgo County EMS / South Texas AirMed did not exist, 1.2 million people would basically not have 911 ambulance coverage,” said Omar Romero, the company’s chief restructuring officer.

The number of ambulance calls dropped about 30 percent when the coronavirus pandemic hit South Texas, according to court documents filed by Hidalgo County EMS. Faced with a financial crisis, the company applied for a loan through the federal Paycheck Protection Program.

Congress created the Paycheck Protection Program to reduce unemployment during the pandemic. If businesses spend the money on payroll, they aren’t required to repay the loan.

Dallas-based PlainsCapital Bank processed the loan application. It rejected Hidalgo County EMS because the ambulance company remains in Chapter 11 bankruptcy proceedings.

Hidalgo County EMS sued the Small Business Administration for unlawfully discriminating against a company in bankruptcy. After a hearing on April 24, a federal judge sided with Hidalgo County EMS and signed a temporary restraining order against the Small Business Administration.

“This can’t be what Congress intended,” said David R. Jones, the chief bankruptcy judge for the Southern District of Texas, during the hearing. “This can’t be how we’re supposed to treat our fellow man at this time.”

The judge authorized Hidalgo County EMS to try again and removed a question about bankruptcy from the application form.

PlainsCapital Bank, though, stopped processing Paycheck Protection Program loans before reviewing the new application. Romero said Hidalgo County EMS contacted six other banks without success.

Nobody wanted to accept the application, Romero said. Some bankers didn’t want to deal with the potential red tape. Some remained concerned about the bankruptcy proceedings. And some just told him to find another bank.

“At this point, our biggest issue is finding a bank willing and brave enough to step forward and say: ‘We’re going to submit your application,’” Romero said.

A spokesman for PlainsCapital Bank said he couldn’t comment on Hidalgo County EMS.

“PlainsCapital Bank has processed approximately 2,900 applications and $800 million in PPP loans for our customers,” said Ben Brooks, a spokesman for the bank, in an email. “Unfortunately, we are not able to comment on individual customer relationships.”

Romero said McAllen-based Lone Star National Bank, where his grandfather is a member of the board, couldn’t assist Hidalgo County EMS because of the conflict of interest.

Other local banks simply weren’t interested. 

“I was quoted in the Wall Street Journal and I still mean it: If we lower service levels, people are going to die,” Romero said. “And it’s amazing to me that our local banks and our local bankers don’t see that and, honestly, don’t care.”

Hidalgo County EMS employs about 250 people, according to court documents filed by the company. Without the Paycheck Protection Program loan or another cash infusion, the company will struggle to pay them.

“These are paychecks. These are people’s livelihoods. This is food on the table for their families,” Romero said. “And there is not a single local bank willing to help.”

In some respects, the Hidalgo County EMS loan may be lower risk than a loan to a struggling business that isn’t in bankruptcy.

A federal judge monitors Hidalgo County EMS and the company must file detailed monthly financial reports. Anyone who makes unauthorized or improper expenditures would be held accountable.

If banks remain concerned about red tape or the bankruptcy process, they could work together on the application and share the risk, Romero said.

“Nobody’s even coming to the table to have that discussion,” Romero said. “The answer is just: find another bank.”