Latest round of PPP gives a boost to small businesses in the region
First State Bank Southwest chairman Mark Vis explained on Monday that the program was due to expire on March 31, but was extended until May 31. This change allows small business owners affected by the COVID-19 pandemic to apply for loans.
Vis noted that the last round of PPP began on Jan. 15 with $ 285 billion in funding available. The biggest difference between the first round, which provided $ 522 billion in forgivable loans over five months before ceasing to accept applications in August 2020, and the current one, which still has $ 73 billion, is that small businesses were specifically targeted this time around. about. Sole proprietors, independent contractors and the self-employed will benefit from greater financial support this time, thanks to revisions to the P3 funding formula.
“This one is different in that you can only apply if you have fewer than 300 employees,” added Brad Meester, who serves as vice president for agricultural and business loans at First State Bank Southwest. “Qualifications also changed with the second round, with entries now based on gross income instead of net income.”
“We’ve seen an increase in apps, with 50 percent more this year than last year,” Vis said. “We had 200 more loan requests this round than last year.”
Many revisions have been made to the administration of PPPs in recent months, in part thanks to the efforts of the Association of Independent Community Bankers.
“A lot of the different banks that apply are the small community banks, and most of them are ICBA members,” Meester said. “ICBA has been a strong advocate for program change and a truly essential supporting tool for the program.”
Although the PPP is a loan, its terms and conditions have also changed over time, Vis explained. The PPP was originally set up for two-year repayment at an interest rate of 1%, and is now set for five years at 1%. Vis said, however, that almost all employers receive a complete cancellation of P3s, the only exceptions being if the company closes too soon after receiving the loan proceeds or if it drastically reduces its employees.
During the first round of PPPs, Meester noted that 90% or more of applicants had their loans canceled. First State Bank Southwest PPP applicants do not need to be clients (although this is encouraged), and those who still wish to apply should bring a copy of their 2019 and (if possible) 2020 tax returns in order staff can determine qualifications.
“Many customers have come in and have been surprised at how easy this process is,” said Annika Henckel, loan officer at the Pipestone branch of First State Bank Southwest. “I think our bank is looking for and reaching out to people who we think could benefit from it and help them understand that the program is really essential.”
Many child care providers, hairdressers, and independent contractors often think they don’t qualify because they don’t have employees. The truth is, they are also eligible for a PPP loan.
PPP applications are typically submitted to the ASB the same day they are completed, and the approval process typically takes two to three days. This quick turnaround time means a quick influx to small business owners who may really need it.
“If it’s a $ 2,000 loan it might not seem like much, but for this particular borrower it certainly is,” said Brad Bruxvoort, president of the market and director of credit in the Edgerton office of First. State Bank Southwest. “We’ve had loans under $ 1,000, and they can be so important to this particular borrower – and that money then goes back to our community.”
Vis said First State Bank Southwest distributed $ 17 million out of 400 PPP loans in the 2020 cycle (an average of $ 42,500 per loan), compared to $ 13 million out of 600 loans (about $ 21,667 per loan) up to ‘now this cycle. This demonstrates that small businesses need P3s just as much, if not more, than businesses with 300 or more employees.
According to the SBA, a total of $ 734 billion was distributed through PPP in 2020 and 2021 as of March 28. The First State Bank Southwest, along with other community banks, often have the local resources available to help borrowers complete applications during what normally off-hours.
For Vis, it is about maintaining a healthy local and regional economy.
“We think it’s important to keep doing it (PPP) as long as the funds are available,” he said. “It means there is more money to spend in our local communities. And, if we can help a few businesses survive, then we feel like we’ve done our job. “
You can find more information on PPPs, including links to participating lenders across the United States. here.