Loan forgiveness process annoys banks

The US Small Business Administration has a new process in place to speed up loan cancellation requests for small businesses, but Arkansas bankers remain frustrated with the agency’s approval process.

The process for canceling Paycheck Protection Program loans remains slow and the Small Business Administration is reluctant to give detailed information about its approval of applications, the bankers said on Tuesday.

Last week, the Small Business Administration released a simpler forgiveness application form for borrowers who received less than $ 50,000. Bankers across the state hoped for more.

“What came out on Friday was kind of a go-between,” said Kevin Hester, director of loans at Home BancShares Inc., owner of Centennial Bank. “It wasn’t all we hoped for, but it helps borrowers under $ 50,000.”

The new process fell short of what the banking industry advocates – a simple form for borrowers with loans under $ 150,000. The small business would sign a certification that the money had been properly used for payroll and essential expenses such as rent and utilities. With this, small businesses could avoid having to submit detailed documentation.

Under the new process, small businesses that have borrowed less than $ 50,000 do not have to calculate full-time employee salaries and other payroll data, but certain documents are required.

“It wasn’t all the relief we were hoping for, but it’s definitely better than it was,” Hester said Tuesday.

Bankers are frustrated with the pardon review and approval process, which the Small Business Administration first announced would begin on August 10. There has been little action since, judging by the number of requests approved.

“It has been frustrating for all the banks and our customers,” said Jon Harrell, President and CEO of Generations Bank at Rogers. “A cat-and-mouse thing happened throughout this process, but the wheels seem to be turning now.”

Approval from the Small Business Administration is slow at best, according to bankers.

Generations Bank has submitted approximately 50 Paycheck Protection Program loans for approval; he received one in 10 responses and was paid back on a loan, according to Luke Colley, market president for Rogers and Bentonville. These submissions began in August.

Centennial Bank made 8,500 Paycheck Protection Program loans and submitted claims for about 2% of those in a process that began about a month ago. The bank has received approval for a loan.

“They haven’t approved loans since Aug. 10,” Hester said. “We got our first SBA approval last week.”

Under its rules, the Small Business Administration has 90 days to act on a pardon request. Centennial asked the agency for an average wait time or how long it might take to review requests.

“All they’ll tell us is they’ve got 90 days, that’s it,” Hester said. “It looks like they weren’t ready to deal with requests until about 10 days ago. We know they’re working on it, but the delay must be huge.”

Nationally, the Small Business Administration has approved 5.2 million paycheck protection program loans for small businesses. The program was put in place in April to help small businesses keep their workers on the job during the pandemic.

Arvest Bank has submitted around 800 rebate requests and got approval for one of them on Friday, according to Marcus Guinn, commercial loans manager for Northeast, Central and Southwest Arkansas. .

“The submission was smooth and fairly straightforward,” Guinn said. “We expect a continued increase in this activity in the days and weeks to come” with the streamlined submission process announced last week by the Small Business Administration.

Arkansas Capital Corp., which has made about 800 Paycheck Protection Program loans, has yet to submit a forgiveness request.

COO and Chairman Sam Walls still hopes Congress will allow borrowers under $ 150,000 – which is the vast majority of the 43,669 loans approved in Arkansas – to sign a simple certification that the money has been used as intended and avoid providing detailed documentation of loan expenditures.

“It will save borrowers and bankers like us a lot of time,” Walls said. “One of the few things the two parties in Congress, and even the White House, seem to agree on is to facilitate blanket cancellation of loans under $ 150,000.”

So far, there has been a lot of discussion on this issue, but no agreement.

Treasury Secretary Steven Mnuchin, discussing guidelines for loans under $ 50,000 last week, said more changes may be on the way.

“We are committed to making the PPP forgiveness process as easy as possible while protecting against fraud and embezzlement,” he said in a press release. “We continue to favor additional legislation to further simplify the pardon process.”

Although the process was frustrating, Colley said, the loans saved jobs. He estimates that the 460 loans granted by Generations Bank have kept around 4,000 workers.

“We were ready to meet challenges just knowing we could help our businesses and keep people working,” he said.

Comments are closed.