The Register Citizen (Torrington, CT)
Banks award $2.5B to help small companies
Nearly 30,000 businesses in Connecticut won federal support under a second round of the Paycheck Protection Program, pushing to nearly 48,000 the number of Nutmeg State entities that have received loans that are forgiven if they do not lay off workers.
PPP is designed to provide businesses with an eightweek cushion to help cope with limits imposed as a result of the ongoing public health emergency. Under the program, 80 percent of any funds approved must be used for payroll and other employee expenses, with the remainder allowed to be used for rent, utilities and other costs.
Adding $2.55 billion to the initial round disbursed in Connecticut, the U.S. Department of the Treasury has now approved $6.7 billion to businesses in the state with less than 500 employees.
State companies have received less PPP funding on a per capita basis than their counterparts in New York, New Jersey and Massachusetts — based on the Small Business Administration’s estimate of 745,000 people working at small businesses in Connecticut.
As of Friday, $175.7 billion appropriated by Congress for the program was still available.
Speaking Sunday on CNN, President Trump’s head economic advisor Larry Kudlow did not rule out a third round of PPP in addition to other federal relief or stimulus.
“This has been an extremely popular and effective program, no question about it. Keeping folks on the payroll is so important,” Kudlow said Sunday. “We waited a little bit too long, I thought, when the [first] tranche ran out. Let’s not make the same mistake again.”
Many small business owners complained of getting squeezed out of the initial round of PPP, with banks favoring customers with existing accounts despite the Small Business Administration guaranteeing the loans.
But the latest Connecticut totals suggest more smaller businesses had success in getting loans than before. The average loan in the latest round totaled $84,000 — equating to a company with a half-dozen employees at the state’s median wage for small businesses, with leftover funding for other expenses — versus $225,000 in the first round on average.
Nationally, the average loan size in the second round of the program has been $75,000, down from an average loan of $206,000 during the first round. The SBA has already approved more than 550,000 additional loans in the second round of the PPP program compared to the first.
“We did well in the first round — and in the second round we did very well,” said Gov. Ned Lamont, speaking Monday afternoon. “We’re focused on May 20. We’re focused on getting things reopened, just because we know that our small businesses have just enough firepower to get through over the course of them next couple of months, assuming they were eligible and got the PPP loans at all.”
In the first round of the program, more than 200 publicly traded companies were approved for PPP loans, a CTInsider analysis of Securities & Exchange Commission filings determined. They included a luxury cruise company affiliated with National Geographic; a film distribution company that provides content to Netflix and Hulu; two large companies operating numerous hotels; and multiple national restaurant chains.
Two publicly traded Connecticut companies were among those to report PPP funding: FuelCell Energy, a Danbury-based maker of fuel cell power plants that hovered last year on the edge of bankruptcy, and Precipio, a medical diagnostics business in New Haven.
Some large companies opted to give their PPP loan back following public outcry and new guidance from the SBA stating that companies must certify their need for the loan. The SBA announced last week it will conduct further review of large PPP loans. The SBA now plans to review all loans in excess of $2 million.
Democratic senators have requested that the SBA’s inspector general investigate reports that banks prioritized loans for their wealthier business clients. Under the program, banks receive more compensation for the large PPP loans they administer than for smaller loans.
Some lawmakers and lobbyists are demanding more changes to help restaurants access the loans. Restaurants have lobbied to change terms in favor of allowing businesses to use more of the money to cover rent. They also want more flexibility on when they can use the money because many restaurants remain closed.
Scott Dolch, executive director of the Connecticut Restaurant Association, called the current limitations on the loans “needlessly restrictive.”
On Monday, U.S. Sen. Richard Blumenthal, DConn., wrote Treasury Secretary Steve Mnuchin to ask that businesses be given more flexibility on when to accept loan disbursements, noting the example of restaurants that will incur larger costs to restart operations due to restocking food inventories, purchasing protective equipment and complying with any new health codes.
Speaking on “Fox Business” Monday, Mnuchin did not indicate willingness for any wholesale changes.
“This is the way the program was designed by Congress,” Mnuchin said. “We think it has the right intent to get the money to employees. So I don’t have the flexibility to change that.”