New sources could help local businesses
By Donnie A. Lucas
Local banks are already being flooded with applications for loans available through the recently passed stimulus legislation know as the CARES Act in light of the impact on small businesses due to disruption caused by the coronavirus outbreak.
The legislation was passed relatively quickly and signed into law by President Donald Trump last week, offering a variety of sources of help for small businesses, which by definition includes companies with a workforce of 500 or less.
One of the quickest and simplest loan products included in the bill is the Payroll Protection Program, which is administrated through local banks. The PPP loans are designed to assist companies that qualify by supporting payroll to minimize the number of layoffs. The PPP loans can be completely forgiven under most circumstances.
In a nutshell, small businesses can borrow up to 2.5 times monthly payroll and have the loan forgiven in part or in full by maintaining pre-coronavirus employment levels, or by rehiring employees that have already been furloughed.
First National Bank of Albany and the local office of First Financial Bank both are reporting an large influx of applications.
“We have had quite a few applications come in that we are helping our customers process,” FNB assistant vice-president Zach Maberry said. “The process is relatively easy with an online application, along with payroll documentation.”
Maberry said that the PPP loan application is available on the Small Business Administration website at SBA.gov. Click the “Learn More” tab under the Coronavirus (COVID-19): Small Business Guidance and Loan Resources. Then click on Coronavirus Funding Options and navigate to the programs available.
“We also have the application forms here at the bank that we can email to you to fill out and send back,” Maberry said.
The Albany branch of First Financial Bank (ffin.com) has a link on their website to available SBA loans that are included in the program.
“It was like opening up a fire hydrant,” FFB senior vice-president Steve Waller said. “It has been a little overwhelming, but we are doing all we can to help customers through the process so we can keep them and our economy going.”
Application Process
Any business owner with employees can apply for the PPP loans by filling out a streamlined application, which is editable online.
Customers can then send back a scanned application form including signatures, along with payroll documentation such as 941 reports for 2019, W2s from 2019 and/or year-end reports to the Texas Workforce Commission that list individual employees and their salary.
The program will also help with up to 25 percent of a business’ rent, mortgage interest, and utilities with appropriate documentation.
As an example, a company with a monthly payroll average of $10,000 can request a loan in the amount of 2.5 times or $25,000, based on the monthly average established in 2019.
Both banks said that the first step is to fill out the application and bring it into the local office or send it via email to a loan officer at their bank. The local banks will then help guide customers with submitting the necessary documentation.
“Banks aren’t making anything off of this,” Waller said. “Our job is to help our customers and submit the paperwork to the SBA for approval.”
Local banks will generate the loan papers for each loan and issue the funds.
The government will calculate how much of a loan will be forgiven after June 30. The program period is from Feb. 15 through June 30, and owners will need to document how many workers they employed during that time and how much they were paid.
The cap on the interest rate has been set at one percent in the event an employer does not have the amount borrowed totally forgiven, and repayment will be deferred six months.
EIDL Loans Available
The SBA is also making Economic Injury Disaster Loan (EIDL) advances of up to $10,000 available in a short period of time through the CARES Act.
This type of loan is designed to help companies that have suffered revenue losses that have left them without working capital, making it difficult to pay operating expenses.
The SBA says the advance can be granted as quickly as three days and does not have to be repaid.
The program allows owners to apply for larger disaster loans of up to $2 million at an annual interest rate of 3.75 percent, with a term of up to 30 years with approval.
Disaster loan applications are made directly through the SBA website.
