The federal loan was approved by congress late last month as part of a $2.2 trillion relief package signed by President Trump. The ongoing pandemic has had a large immediate economic impact on communities across the country.
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As of Thursday afternoon, the SBA had already approved about 400,000 paycheck protection loans, representing more than $100 billion. The loan is designed to be forgiven for small business that retain their workforce as well as follow other measures set by the SBA.
“This program is trying to keep as many people employed as possible,” said John Brown, the president of Security National Bank. “That is why the forgiveness piece is tied with being able to show that those businesses kept their doors open and their employees working.”
A statement from the SBA regarding the loan program said businesses that participate would be eligible for complete loan forgiveness as long as they are able to retain full staff and payroll.
Brown said that those applying for the program can receive a maximum loan of two and a half times more than their average monthly payroll during 2019. However, they cannot exceed an amount surpassing $10 million.
He said that his bank has been getting conditional approval for businesses that have applied for the program through Security National. However, the SBA has yet to release official guidance regarding the closing of those loans.
“What most banks are doing right now is collecting as much information as they can from customers and entering that into the (SBA’s) portal,” Brown said. “We are trying to be as prepared as possible for when further guidance does come.”
He said they have approved hundreds of customers so far. However, those businesses will not receive the actual loan until guidance regarding the closing process is released.
He did not share the exact number of applications that have been administered by Security National, but added that the bank primarily serves Clark, Champaign and Greene counties.
Alex Dietz, the economic development coordinator for Clark County, said that businesses considered essential and have remained open as well as those that had to temporarily shutter their doors during the pandemic are eligible apply.
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Horton Hobbs, vice president of economic development for the Chamber of Greater Springfield, said it is his understanding that loan forgiveness will be reduced if employers are not able to retain full payroll at the end of the loan period or have reduced payroll by more than 25%.
He said businesses must have less than 500 employees in order to qualify. Some non-profits are eligible to apply as long as they are classified as a 501-3C.
Currently the program is funded up to $350 billion. An attempt to add $250 billion to the program has been stalemated in congress as of Friday afternoon.
There have been several local efforts to educate businesses about the loan program.
That has been through online presentations by the Chamber of Greater Springfield, posted on its website www.greaterspringfield.com/news/covid-19-resources, as well as assistance from the Small Business Development Center.
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