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April 3, 2020

CT banking industry calls for patience amid $349B payroll stimulus program launch

PHOTO | Contributed Connecticut Banking Commissoner Jorge L. Perez.
By Joe Cooper

Connecticut banking regulators and industry leaders on Friday warned small businesses to be patient as they seek a piece of a new $350 billion federal loan program aimed to help them avoid layoffs and rehire staff amid the economic crisis caused by the spread of the coronavirus.

The federal government’s plan to support small businesses is the Paycheck Protection Program (PPP), which was included in the larger CARES Act signed into law last month. The U.S. Small Business Administration (SBA) is slated to begin accepting applications for loans on Friday.

While loans are expected to be approved as soon as Friday by any SBA 7(a) lender, bank or credit union, Connecticut Department of Banking Commissioner Jorge Perez on Friday cautioned that the program “may take a bit longer than customers may anticipate” to dispense loans.

“This is a brand new program that is literally still under development as of today,” Perez said in a statement. “Everyone who needs access to the PPP should check with their bank for information on when they will begin accepting applications.”

Tom Mongellow, CEO and president of the Connecticut Bankers Association, said in-state banks will begin accepting applications from small business owners on Friday. However, the industry anticipates “an overwhelming number of applications” that will likely inundate SBA’s system, he added.

“We’re just getting started, and our banks will be there for you,” said Mongellow, suggesting that businesses should only be applying to one bank. “That is why we are simply asking for patience from our customers -- as we are all in this together.”

The PPP, part of the $2-trillion stimulus package passed by Congress and signed into law by President Donald Trump last week, is run through SBA and its banking partners

Under the program, banks will be offering 1% interest loans – which could be forgiven – for businesses with 500 or fewer employees. The loans are also available to not-for-profit organizations, independent contractors and those who are self-employed.

Connecticut businesses will be able to take out loans totaling 250 percent of their average monthly payroll in 2019. If they spend at least 75 percent of that money to pay their workers, those businesses will be eligible to have the loans fully forgiven at federal expense.

The application process for the program has been streamlined. To apply for a loan at a participating bank, a business owner simply has to fill out a two-page form and provide some documentation. The loans are capped at $10 million.
 
A CT Mirror report contributed to this story

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