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Banks, businesses receive PPP forgiveness instructions, advocate for more time

By Natalie Anderson
natalie.anderson@salisburypost.com

SALISBURY — Though banks and businesses received long-awaited guidance for Payroll Protection Program loan forgiveness on May 15, some industries are advocating for changes in the program to allow businesses more time to use the funds and avoid losing their loan forgiveness.

Peter Gwaltney, president and CEO of the North Carolina Bankers Association, said businesses have struggled to administer the PPP funding they’ve received in time. In order to receive loan forgiveness, businesses have an eight-week time period to use 75% of the funds for payroll-related expenses and only 25% for limited expenses.

The banking industry and others, however, have been advocating for longer periods of time for businesses to administer their funds, and the National Restaurant Association has proposed up to 24 weeks. The restaurant industry, in particular, only comprises a small portion of the PPP funding, about 9%, according to the latest SBA PPP funding report. But it makes up the majority of layoffs nationwide. One major issue the National Restaurant Association has cited includes difficulty keeping employees on the payroll when the extended unemployment benefits have been a more substantial source of income for laid-off employees.

Gwaltney added that the banking industry has advocated for “more forgiving forgiveness,” which would result in a change in the expense limit. Additionally, another proposal is to automatically forgive loans that fall below a certain amount of funding.

“It’d be a lot easier for everyone to understand,” Gwaltney said.

On Thursday, Sens. Angus King, an independent from Maine, and Steve Daines, a Republican from Montana, introduced legislation to extend the time period that businesses have to use PPP funds and eliminate the 25% expense limit. Additionally, U.S. Secretary Steven Mnuchin said on Monday that the administration would look into extending the time period.

But Gwaltney said banks and businesses are “running out of time” since the U.S. Senate adjourned on Thursday and won’t return until June 1. As a result, banks and businesses had been “holding out for changes” but didn’t receive any.

“The Senate has recessed, and they left town without fixing this,” he said. “And they don’t come back for two weeks.”

The Rowan County Chamber of Commerce is also advocating for an increase in funding and length of repayment periods for the PPP, “ensuring equitable distribution,” said chamber president Elaine Spalding.

F&M Bank in Salisbury has recommended businesses wait to complete the applications for loan forgiveness as they “believe there is a strong possibility that there will be further guidance and additional changes to the documentation.”   

“While various questions still linger, the loan forgiveness application is a helpful tool in answering some ambiguities in the laws, regulations and guidance provided so far,” said F&M Bank in a statement to PPP loan customers.

Additionally, the U.S. Chamber of Commerce has provided a guide to completing the PPP loan forgiveness application, which can be found at uschamber.com/coronavirus.

F&M Bank added in a statement that, until any changes are implemented, loan forgiveness applications will abide by the current regulations in place. Gwaltney said the application process can take up to three hours. Businesses are required to use the same system and lender in which they applied for funding.

He added that he “expects a lot of small businesses” to fill out the applications themselves, with the “repetitive motion” resulting in more proficiency each time. However, other businesses may opt to use a third-party company to automate the process and submit the information to the lender on the business’ behalf.

Gwaltney emphasized that there is still more than $100 billion left in PPP funding, with a “turnaround time of a matter of days.” As of May 16, North Carolina has approved 109,032 loans, totaling approximately $12.3 billion in funding.

Contact reporter Natalie Anderson at 704-797-4246.

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