A Person Filling Application Form. Apply For The Paycheck Protection Program With An Eligible Lender

Nearly a year into the coronavirus pandemic, the federal government is continuing to dispense monetary assistance for businesses hit by the economic downturn and widespread restrictions on their operations.

But banks servicing Rappahannock County say the uptake has been slower this time than with the first round of assistance last April, when businesses flooded them with applications and overloaded their online systems.

Jason Brady, senior vice president at Oakview National Bank in Washington, believes one explanation for the shift could be that under this latest round of Paycheck Protection Program funding, borrowers can take out a second loan of up to $2 million only if they’ve used all or most of their first, have fewer than 300 employees and experienced losses of at least 25% between the same quarter in 2020 and 2019.

“Depending on the business sector and the outlet with which they access their customer base, many are not able to meet that threshold,” Brady wrote in an email.

Some businesses, on the other hand, have seen their fortunes improve.

“I have spoken to several customers who although they may meet the requirement, their business has since recovered and they do not see the need to apply for the second round,” Brady added.

When the federal government’s Paycheck Protection Program (PPP), an emergency fund aimed at helping small businesses keep their workers on payroll, launched an initial $349 billion in loans on April 6, the funding pool was drained in less than two weeks. Then-President Donald Trump authorized another $310 billion to replenish the fund just 14 days later.

By the end of 2020, around $525 billion in funding had gone to small businesses across the country. In Rappahannock, more than 120 enterprises (including the parent company of this newspaper) received a total of just over $6 million through the PPP. 

PPP Redux

With the newest infusion of nearly $285 billion in funding, the program’s conditions for loan forgiveness have been relaxed. Initially, businesses had to spend at least 75% of their loan on payroll in order to qualify for loan forgiveness. The remaining 25% could be put exclusively toward rent, mortgage or utility payments. 

Now only 60% of the loan must go toward payroll for a recipient to be eligible for forgiveness, and other eligible expenses now include worker protection costs, such as personal protective equipment, uninsured property damage caused by looting or vandalism in 2020 and some other operating expenses.

This time the funding is being disbursed differently, too, so that business owners who were overlooked or ineligible in previous rounds — like single proprietors, independent contractors and self-employed individuals — have better access. 

On Feb. 24 the U.S. Small Business Administration (SBA), which administers the program, opened up an exclusive round of funding for very small businesses. From now until March 9, only businesses and nonprofits with fewer than 20 employees are able to apply for PPP loans. Larger, eligible businesses can apply again starting March 10 until the program expires on March 31.

According to the SBA, the measure is aimed at addressing the disproportionate amount of funding that went to larger businesses in wealthier areas. The Biden administration also removed some barriers that were seen as exclusionary, like the automatic disqualification of individuals with non-fraud felony convictions and those with student loan debt delinquencies.

Despite those measures, Theresa Wood, president of Business of Rappahannock, said she hasn’t had any inquiries about this round of PPP funding. She’s not sure whether that means those businesses have levelled out or learned to navigate the system — or for another reason entirely. 

But, she noted, few businesses are thriving at the moment.

Wood recently held a talk with a handful of restaurant owners to discuss some of the challenges they have been facing and said she could hear relief as they realized they were all in the same boat.

“It was a good call,” Wood said. “There was this comradery that it wasn’t them it wasn’t their establishment, it’s the environment, it’s a whole lot of things.”

Meanwhile, applications for PPP loan forgiveness have been slow to come in. Last fall many lenders advised their clients to hold off on applying because the rules were likely to shift.  

Oakview is currently processing applications but Atlantic Union Bank says it has temporarily paused doing so following new guidance from the SBA that includes a simplified application process for borrowers with loans of up to $150,000 and the additional items that may now be considered in forgiveness calculations. 

“The SBA has indicated their forgiveness application portal will not reopen for lenders until March 5, 2021. As a result, we have temporarily paused taking and processing of forgiveness applications to give us time to update our systems and procedures for processing them,” Atlantic Union says on its website. 

Some business owners say they don’t expect the process to be difficult, particularly if their loans are small, but they’ve been advised to wait to apply for forgiveness until the end of the loan period to ensure all their funds are spent.

Still, for potential first-time borrowers like Debbie Donehey, PPP may be just the thing to get through another uncertain year.

The owner and manager of Griffin Tavern in Flint Hill didn’t apply for PPP loans last year, opting instead for an Employee Tax Credit that provides a refundable credit to employers for up to $5,000 per employee they retain. 

She said she’s currently doing research to determine if there are any conflicts with that credit that would prevent her from accepting PPP funding. If not, she’ll likely apply, she said. 

“It appears that the virus or fear of the virus will probably run through this year, which means indoor dining will remain slow. I need to be prepared both mentally and fiscally for another below normal year,” Donehey said.

By Sara Schonhardt

For Foothills Forum

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