Businesses that have applied for potentially forgivable loans through the Small Business Administration’s Payroll Protection Program may start to see the money show up in bank accounts as soon as Friday, a group of local lenders said Wednesday.
Banks and credit unions that are participating in the program told participants in a Northern Colorado regional chamber of commerce conference call Wednesday that those applicants who applied starting Friday last week may see the money flow soon.
Chambers of Commerce from Loveland, Fort Collins and Greeley hosted the conference for businesses interested in information about the PPP program. Interest in the program has been high nationwide.
Larry Kudlow, director of the National Economic Council, said Tuesday that 178,000 loans had been approved as of that day, totalling about $50 billion. A total of $349 billion of the $2 trillion congressionally approved stimulus package has been designated for the PPP. Demand could exceed funds designated.
Eligible businesses may apply for loans equal to 2.5 times its average monthly payroll. The money may be used for payroll, utility expenses, mortgage payments and tenant rent, but 75 percent of it must be spent on payroll if the borrower wants to have the loan forgiven. If not forgiven, principal and 1% interest would need to be repaid over a two-year term.
The idea for the program is to get people back to work quickly and encourage businesses to avoid laying off employees.
Nicole Staudinger with FirstBank told conference participants that the program expects participating banks to fund the loans within five days of application.
“Bankers are asking for some leniency on that,” she said, because of the large number of loan applications they are processing. “We’re still hoping to start funding the loans this week.”
Shawn Osthoff, president of Bank of Colorado, said a potential sticking point for the loans occurs for businesses that are currently shut down and can’t reopen because of government executive orders. Business operators would still have to use 75% of the money for payroll starting when funds are dispersed and concluding eight weeks after dispersal.
“The program is meant to get people back to work. You may want to delay when you get the funds,” he said, to avoid paying employees who can’t work because the business is closed. Businesses taking that route could risk not getting funding under the program if the $349 billion fund is depleted.