Payment Protection Program to be funded again

Local banking institutions said they expect more funding to be released later this week for the Small Business Administration’s Paycheck Protection Program.
The Pioneer reported last week on the program, particularly that Yuma banks were receiving a large volume of applications from local businesses and were having good success getting them approved and funded.

However, it was then announced last Thursday that nationally the $349 billion earmarked for the program had been exhausted, less than two weeks after its launch.
“We were able to fund all completed applications,” Dan Seedorf of Bank of Colorado said. “Unfortunately we had a few that we still needed a little documentation and in those cases we were not able to complete the application. Again, we expect funding soon and will make it a priority to get those moving forward.”
First FarmBank, TBK Bank and Premier Farm Credit also reported getting applications approved and funded, but have others now waiting for the PPP to be replenished.
The Senate approved a $484 billion bill on Tuesday, including $320 billion for the Paycheck Protection Program. Of that, $60 billion would be set aside for community based lenders, smaller banks and credit unions to assist smaller businesses that don’t have established relationships with big banks and had a harder time accessing the funds in the first round of loans, according to news reports.
The legislation also includes $75 billion to help hospitals and $25 billion for a new coronavirus testing program.
The House is expected to act on the bill on Thursday, April 23. If approved, it will head to President Donald Trump for approval.
Local banks have continued taking applications, and are keeping the ones that had not been finalized when funds ran out last week in anticipation of more funds being available soon. The applications cannot be submitted to the SBA until the funds are replenished.
The PPP loans are available to all small businesses, which is considered any business with less than 500 employees. Any small business that was open as of February 15, 2020, is eligible, so even those businesses currently closed may apply.
No collateral is required, and the loan is not taxed per SBA rules.
Loan figures are based on a business’ average monthly salary in 2019, which is backed up by documentation such as the quarterly Form 941 reports. The business’ average monthly salary is then multiplied by 2.5 to come up with the loan figure. Each bank has their own set of required documentation, if necessary, but for the most part are similar.
The loans carry a 1-percent interest rate with a payback period of 24 months, but payments do not start until six months after receiving the loan.
What’s more, a business can get up to 100 percent of the loan forgiven — turning into a grant instead of a loan.
A business has eight weeks to spend the funds. Allowable expenditures include payroll, employee benefits, rent, utilities, and interest on mortgage and debt obligations.
Businesses will have to document how the money is spent in order to be forgiven. Your lender can help you through that process.
If it is determined some of the expenditures do not meet the “forgiveness” list, that portion will have to be repaid based on the terms listed above.
While many local small businesses have successfully accessed the funds, there are reports of issues with the program.
There have been reports of problems at the national level, such as larger companies being able to access the money. Shake Shack, one of several large restaurant chains that got federal loans through the coronavirus stimulus law meant to help small businesses, said Sunday night that it is giving all $10 million back. Some of the nation’s largest banks also have had lawsuits filed against them alleging the banks prioritized borrowers who were seeking larger loan amounts under the PPP, in order to generate bigger loan origination fees for the bank, rather than processing the applications on a first-come, first-serve basis.
Around here, though, many have been able to access the much-needed stimulus, and there are more hoping to do so as well when the Paycheck Protection Program reopens.