Banks are working with small business owners to supply funding from the Small Business Administration's Paycheck Protection Program. | Facebook
Banks are working with small business owners to supply funding from the Small Business Administration's Paycheck Protection Program. | Facebook
Customers and banks in North Carolina had no idea forgivable loans were headed their way, but recently the Small Business Administration announced it would provide financial relief to small businesses through the Paycheck Protection Program.
The Paycheck Protection Program (PPP) is designed to help businesses pay employees for eight weeks while stay-at-home restrictions are in place, according to an April 14 The Times-News report.
“None of our customers saw this coming; no bankers saw this coming,” Keith Strickland, area executive at First Bank for Alamance and Orange counties, told The Times-News. “We had this laid in our laps a week ago Friday.”
Bankers at First Bank have been working nonstop since the program was announced to be able to understand it and process applications, Strickland told the Times-News.
Financial institutions are trying to provide the grants as quickly as possible, but the infrastructure isn't designed to award $350 billion in loans out in one day, Brandon Sheridan, assistant professor of economics at Elon University, told The Times-News.
“In a time like this you want to get money out to everybody who needs it including small businesses fast,” Sheridan told The Times-News. “In reality, you could see it coming that there would be a massive demand.”
Many small businesses are applying for the grants, but to be eligible for a loan they have to spend 75% of it on payroll, according to The Times-News, and some business owners have said this isn't helpful.
“It’s not actually helping the ones that were most hurt in its current format,” Jason Cox, Graham-based owner of multiple businesses, told The Times-News.
Cox told The Times-News that the PPP shouldn't be used as a back-door program for businesses that aren't able to stay open during the statewide shutdown.
“I can’t hire people back until I have work for them,” Cox told The Times-News.
He also told the publication that accepting the loan and not using it on the payroll might result in a business owner accruing more debt if the company fails after the crisis.
“There’s a lot of I-don’t-knows,” Cox told The Times-News. “And if I do that and fail two months later – there’s no way I’m going to get forgiveness.”
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