The Middletown Press (Middletown, CT)
Conn. businesses line up for $349B ‘paycheck protection’
With solo business proprietors elbowed to the back of the line, smaller employers in Connecticut kicked off a frenetic weekend trying to qualify for a piece of a $349 billion federal program that provides forgivable loans of up to $10 million if they retain workers during the coronavirus pandemic.
The Paycheck Protection Program launched Friday morning under the oversight of the Small Business Administration. Funds are being disbursed through private-sector banks and credit unions, which will recoup money from SBA for any loans that are forgiven as employers maintain payrolls. Up to 25 percent of the proceeds can be used as well for other major costs like lease payments.
The program is open to both businesses and nonprofits with up to 500 employees with some exceptions under SBA guidelines. Independent contractors and other solo entrepreneurs can apply as well, but will be forced to wait a week until April 10 to do so. The U.S. Department of the Treasury has posted information on the program and required documentation at home.treasury.gov.
The National Federation of Independent Business reported late Friday afternoon that many small businesses were complaining of being “shut out” of the program after rejections of their initial loan applications. Would-be borrowers took to Twitter and other social media platforms Friday to say that national banks were not prepared to handle loan requests, or otherwise restricting applications to existing customers with business accounts or credit cards.
The Connecticut Department of Banking urged patience for any borrowers having difficulties getting through to lenders to commence
their applications.
“We are reminding people that this is a brand new program that is literally still under development as
of today,” said Jorge Perez, Connecticut’s banking commissioner, as quoted in a written statement. “It may
take a few days for the SBA program to be fully capable of processing the expected volume of applications.”
The Connecticut Department of Economic and Community Development maxed out within a few days a $25 million bridge loan program intended to provide short-term financing until SBA was up and running with its own programs, with DECD readying another $25 million in capacity.
Middletown-based Liberty Bank likewise got an early inkling of what could be in store, after halting on Friday a separate personal loan program it had launched only Monday, offering up to $5,000 interest-free loans that do not have to be secured by personal assets. More than 1,100 borrowers pounced, with Liberty Bank announcing Friday it had lent out the $5 million program fully, kicking in an extra $2 million to fulfill applications prior to closing the fund to new applications.
The president First
County Bank said the Paycheck Protection Program’s two-page application does not take more than 10 minutes for a business owner to fill out, provided all needed information is at the ready, with the Stamford bank only encountering one hiccup in the early going in a few required pieces of information for online submissions that were not included in the initial application.
“[Thursday] night they put out the latest guidance from the SBA — that helped a lot,” said Willard Miley, president of First
County Bank. “We updated our website with all that information and we began submitting applications (Friday) morning.”
After Union Savings Bank opened up applications at midnight and alerted some 3,000 customers via a mass email blast Friday morning, the Danburybased bank had received more than 250 applications through Friday afternoon, along with 425 calls in the morning hours alone.
“We were still receiving guidance late last evening from Treasury and suspect more to follow, so we like many banks are cautioning our customers we may need more documentation,” said Union Savings Bank CEO Cindy Merkle in an email response to a query. “Our phones are busy but we have put a number of our branch team on them to supplement our (call center) team to minimize wait time. ... We also have our lenders working on the applications as they arrive and expect this will continue throughout the weekend.”
The CEO of New Canaan-based Bankwell said his company has received hundreds of queries, with staff working up to 20-hour days in the lead-up to the program’s debut.
“Almost everybody in the financial services industry associated with this expects this to be the first wave, and that more money will be allocated to it,” said Bankwell CEO Chris Gruseke. “It’s an important program — people are just going to have to be patient. The system is going to try to process volume it’s never done before, and we’re all just trying to get it done.”