Loan forgiveness outlined for firms

Small businesses can now apply for forgiveness of the Paycheck Protection Program loans they received to help keep workers employed during the coronavirus pandemic.

Over the weekend, the U.S. Small Business Administration sent out applications and outlined instructions for next steps that business owners should take to have the paycheck protection portion of their loans wiped off the books.

Businesses that borrowed under the program are advised to study the 11-page application so they understand the forgiveness requirements, according to Edward Haddock,

director of Small Business Administration operations in Arkansas.

“It’s best the businesses take this time to familiarize themselves with the documents and requirements,” Haddock said, “to make an informed decision on utilizing PPP funds to help maximize forgiveness.”

Businesses begin the process by filling out their loan forgiveness applications and sending them to their banks for review and approval of the loan specifics. The applications are then sent to the Small Business Administration for final review and approval.

The agency reports that 39,155 of Arkansas’ small businesses have borrowed about $3.4 billion under the Paycheck Protection Program, which began in mid-April to inject capital the companies need to pay employees and meet operational expenses such as rent and utilities.

Small businesses can still apply for funding. “There is funding available, and we encourage businesses and

eligible applicants to ensure their application is in,” Haddock said.

The Paycheck Protection Program was created in March by the Coronavirus Aid, Relief and Economic Security Act to provide forgivable loans to eligible small businesses to keep workers on the payroll during the pandemic. The loan will forgive repayment equal to eight free weeks of payroll costs.

There are no details yet on how businesses will be notified they have been approved for forgiveness or how soon that may occur, according to Haddock.

“That is a little early to speculate on, considering the size and scope of the program,” he said. “SBA is working tirelessly to support borrowers and lenders as they navigate the challenging environment.”

Lenders, however, have financial motivation to move quickly.

Bankers “will have an incentive to get these loans forgiven as soon as possible, as to not hold a 1% loan on their books for 18 months,” said Chris Padgett, executive director of the Arkansas Community Bankers Association.

Congress has authorized the Small Business Administration to provide more than $650 billion in loans to small businesses suffering economic harm during the pandemic. Companies with fewer than 500 employees are eligible for loans of up to $10 million.

Nationwide, about 4.3 million businesses have borrowed $531.2 billion since the loan program opened in midApril.