April 15, 2020
by Erin Arvedlund,
Small businesses in Pennsylvania have received just shy of $10 billion in relief loans as part of the sweeping coronavirus economic rescue package, according to new federal figures.
The Small Business Administration released a report late Tuesday showing that the Paycheck Protection Program (PPP) has approved more than one million loans for a total of more than $247 billion, through more than 4,000 participating lenders nationwide. Seventy percent of the loans approved were for amounts less than $150,000.
And 36,604 Pennsylvania companies received about $9.9 billion through local banks and other lenders.
“The SBA and our partner federal agencies alongside state and local government, are working together to protect public health and the future of small business," Steve Bulger, SBA’s Mid-Atlantic regional administrator, said in a statement. "SBA’s top priority is to ensure small businesses can continue their contributions to the state’s economy, and our nation.”
Pennsylvania ranked in the top 10 states based on both loan dollars and the total number of loans.
Separately, the SBA also issued new guidelines for independent contractors and self-employed workers, who had to wait until late Friday to apply for PPP loans. They can get PPP loans equaling 2.5 times their monthly salary in the form of a forgivable low-interest loan, the SBA said, and can use up to 75% of the money for payroll.
The new SBA guidance for contractors and the self-employed outline what they can include as payroll, how to calculate the maximum amount of the loan, what they can do with the loan proceeds, and how it can be forgiven.
The Paycheck Protection Program is providing forgivable loans for small businesses to keep workers employed. SBA will forgive the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The $350 billion program had a rocky start, and the Trump administration is pushing for an additional $250 billion for more loans.
Dorothea “Dee” Gillette-Spencer, the owner and CEO of D. Gillette Industrial Services, a family manufacturing business in Bangor, Northampton County, said she applied for and received a $135,000 loan to keep her 10 employees on the payroll. DGI makes equipment for the Department of Defense.
DGI submitted its PPP loan documents to OceanFirst Bank, she said. “We supplied them with all the documents required from QuickBooks and from ADP, which does our payroll.”
From start to finish, the application process took two weeks, Gillette-Spencer said.
“This has allowed DGI to remain fully staffed and producing equipment for U.S. war-fighters, as well as now exploring the possibility of producing equipment for medical first responders,” she said, adding that working with a smaller bank likely helped speed the flow of cash.
“I imagine the larger banks are overwhelmed," Gillette-Spencer said. "We have an existing relationship with a smaller bank, OceanFirst, and that made the difference.”
Frank Giordano was a unique borrower, securing three separate loans, each under $1 million, from Republic Bank: one for his company, Atlantic Trailer Leasing Corp., and two for nonprofits he leads, the Philly Pops and the National Italian American Foundation.
“I heard some horror stories from friends [at other banks]. But our process at Republic was smooth,” he said. His three organizations employ roughly 250 people, he said, and the nonprofits “have no income coming in at this time, so we needed the loans to keep the staff going.”
Borrowers can apply through existing SBA lenders or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. The average loan is $239,152. About 85% of the loans approved were for less than $350,000, representing about 30% of total loan approval amount, according to Keefe Bruyette & Woods banking analyst Kelly Motta.
The top five industries by approval amount are construction (14% of the total money loaned); professional, scientific, and technical services (12%); manufacturing (12%); health care and social assistance (11%); and accommodation and food services (9%).
Go online to the Treasury’s website here for the full document: https://home.treasury.gov/system/files/136/Interim-Final-Rule-Additional-Eligibility-Criteria-and-Requirements-for-Certain-Pledges-of-Loans.pdf.
You will likely need your 2019 tax returns and payroll information, so check with your payroll company or accountant for any needed documents. Also, have your mortgage interest, utilities and other expense documents available, as well.
Will PPP Run Out?
After reports late Wednesday that the PPP loans might run out, small business advocates said new data show 90% of small businesses have been impacted by COVID-19 with a large percentage reporting a severely negative impact.
One in three business have closed and 14% more plan to do so. While it is clear that PPP is not a long-term nor an efficient solution, Congress must immediately add robust funding to keep it solvent, and not delay any further in providing direct cash grant assistance to the smallest, most vulnerable businesses,” said John Arensmeyer, Founder and CEO at Small Business Majority.