Administrative issues that disrupted the rollout of the federal paycheck protection program have been largely resolved, the US Small Business Administration’s senior administrator for New England said on Wednesday.
However, that initial $ 350 billion loan pool has been depleted, the SBA announced Thursday morning, and Congress has yet to agree on a new and fourth phase of lending that would keep the lifeline open for them. companies struggling to reach the light at the end of the economic shutdown of the COVID-19 crisis.
Wendell Davis, New England Regional Administrator for the SBA, was one of the featured panelists in a webinar presented by New Haven BIZ and the Hartford Business Journal on the CARES Act and PPP: Where are we today and what can businesses expect tomorrow?
On Tuesday, 11,930 PPP loan applications were approved for Connecticut companies worth nearly $ 3 billion – New England’s second-highest loan volume, behind Massachusetts, which had 27,315 Approved loans worth about $ 7 billion, Wendell said.
Connecticut attorney Wendell G. Davis is the regional administrator for SBA Region 1, which covers Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut.
The Wednesday afternoon session, moderated by HBJ Editor-in-Chief Greg Bordonaro, was the second installment of a state-wide community business program that kicked off on Friday and featured professionals financial services and legal sectors as well as government and major business groups.
Twelve days ago (April 3), the Federal Paycheck Protection Program (PPP) began accepting applications from besieged businesses across Connecticut and the country. The PPP is the cornerstone of the government’s $ 2 trillion stimulus package, Coronavirus Aid Relief & Economic Security (CARES), drafted and enacted at breakneck speed to help the economy cope with the trade consequences of the crisis. COVID-19 pandemic.
In the hours following the April 3 deployment, banks across the country were inundated with demands and questions from businesses reeling from the shutdown of much of the country’s economic life. Bank officials blamed the delays on insufficient guidance from the SBA, many banks only accepted applications from existing commercial borrowers, and by the second business day of the program, Wells Fargo Bank had already abandoned the program.
Acknowledging that “there were hiccups in the first two days” of the PfP deployment which began on April 3, Davis said “these were temporary and were corrected immediately.” In recent days, loan program applicants should have gotten faster action – in “less than 24 hours,” he said – after their financial institution processed their request and forwarded it to the government. SBA.
“Once the application is submitted, the SBA assigns a loan number to the application and returns it to the lender [bank] for closure, ”Davis explained. “The banks then have 10 days to close and disburse these funds. “
The burden of the program – “getting $ 350 billion off the streets in weeks, not months, is a gargantuan task,” Davis said. “I know the money started coming in last week, and it has increased dramatically over the past two days,” he added.
However, on Wednesday evening, the Wall Street Journal reported that the PPP “has used up most of its funding” and that at the close of business on Wednesday April 14, the SBA had given the green light to 1.5 million valued loans. to over $ 324 billion.
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Treasury Secretary Steve Mnuchin.
On Thursday morning, US Treasury Secretary Steven T. Mnuchin and US Small Business Administration Administrator Jovita Carranza released a statement saying PPP funds have run out and urged Congress to approve more funding.
“We urge Congress to allocate additional funds to the paycheck protection program … at this point we will once again be able to process loan requests, issue loan numbers and protect millions of checks. additional payroll, ”he said. “The high demand we have seen underscores the need for hard-working Americans to have access to relief as quickly as possible. We want all eligible small businesses to participate and get the resources they need.
The SBA said applications are also no longer being accepted for the economic disaster loan program until additional funds are allocated.
Asked by Bordonaro on Wednesday whether there was still time for companies to apply for PPP loans, Davis said, “We encourage everyone to apply,” despite pending action by Congress to replenish the loan pool. “If your bank is no longer accepting applications, switch to another bank. “
“These are terribly difficult times for small businesses,” he added, “and we’re here to help them get through this in any way we can.”
Joe Brennan is the CEO and President of the Connecticut Business & Industry Association, the state’s leading business lobbying group.
State of the TB economy
Joe Brennan, president and CEO of the Connecticut Business & Industry Association, the state’s largest business group, also attended HBJ’s webinar on Wednesday, providing an economic update as well as a response to the management of the crisis by Governor Ned Lamont.
“We know this is going to be a huge blow to our economy,” said Brennan, who previously announced his retirement later this year.
“Gov. Lamont has been a bit more liberal than some governors in defining which companies are “essential” and therefore allowed to remain in business, Brennan said. “We were the first state to declare all essential manufacturers, so all manufacturing businesses are open.” He added: “It doesn’t mean they’re all in production, but at least they’re open and paying their employees.”
Many small manufacturing companies in Connecticut quickly turned to producing much-needed personal protective equipment as well as components for rescue ventilators and other hospital equipment.
Asked about the prospects for a “reboot” of Connecticut’s economy, Brennan highlighted the cooperative agreement Lamont had reached with six other northeastern states to come up with a common strategy and approach to revive business and trade.
“We know that isn’t going to happen as soon as a lot of people would like it to happen,” Brennan told her professional audience. “But at least we are developing a process now, in cooperation with other states, to get to the point where we can open these [non-essential] companies. And everyone is looking forward to that date – but we don’t want to do it in a way that is just going to create a rebound in the number of infections in Connecticut. “
Panelists for the webinar also included Tim Bergstrom, president of the Hartford Market for Webster Bank, one of Connecticut’s most active SBA lenders. Bergstrom said his bank processes PPP loan applications “on a first-in-first-out basis.” We want as many of our customers as possible to have access to this money. “
Taylor A. Shea, partner at Robinson + Cole Law Firm, discussed the most immediate practical legal issues for businesses seeking loans under the New Stimulus Package – eligibility and terms governing the use of loan proceeds .
Drew Andrews, managing partner at CPA Whittlesey, explained that P3 loans are designed to keep employees on the company’s payroll for eight weeks. If this condition is met, the loans are repayable. Otherwise, they have a 1% interest rate and a 24-month amortization period.