Banks awaiting guidance on how to rollout $349B small business loan package
A federal program to award $349 billion in forgivable small business loans takes effect today, and local bankers are trying to work out the specifics of how to help customers secure the funds.
“Right now, there is a lot of misinformation out there, and all of the specifics are not known at this time,” said Jeff Kervin, president and CEO of Troy Bank & Trust.
“ What we would like for our customers to do is to let us know they are interested in participating in the Paycheck Protection Plan and we will get pertinent information from them,” he said. “When all of the details of the program are shared, we will contact the customer to complete the process with them and give them accurate information.”
The Paycheck Protection Plan, passed as part of the federal government’s CARES act, authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.
According to the U.S. Treasury guidelines, the loans will be forgiven as long as:
• Loan proceeds are used to cover payroll costs, and most mortgage interest, rent and utility costs over the eight-week period after the loan is made;
• And employee numbers and compensation levels are maintained.
“The SBA hasn’t released guidance yet on what these loans will look like,” said John Ramage, president of First National Bank. “Customers have been downloading the application from the SBA website and dropping it off, but we don’t have the guidance to process those loans yet.”
The loans are open to all businesses, including nonprofits, veterans organizations, Tribal businesses, sole proprietorships, self-employed individuals, and independent contractors, with fewer than 500 employees.
Businesses can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
Ramage said the loans are going to be critically important to many Pike County businesses. “This is a great way to keep America working,” he said.
But people will need to understand that it could be days or weeks before the funds are available.
. It is important to remember that (Friday, March 3, 2020), is the beginning of the program – not the end,” Kervin said.
Banking officials have said that limited guidance has been issued by the Small Business Administration and the U.S. Treasury, while customers have many questions about the process.
“Banks across the nation are literally waiting for instructions from the government on how to move forward,” said Scott Latham, Alabama Bankers Association president and CEO. “While we are grateful for the help, we are frustrated that those needing help the most are forced to suffer while the rules are still being written.
“Banks across Alabama have a strong reputation of helping individuals and small businesses during good times as well as the challenging times, and this difficult period will be no exception. Until the rules are final, we. Are simply in a waiting game that is out of our control.”
Anyone who is interested in the PPP loan program should contact his or her local banker for more information.
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