Area lenders brace for stimulus loan applications

Forrest Gossett
Special to The Courier-Post
Posted: Apr. 6, 2020 10:18 am Updated: Apr. 6, 2020 12:05 pm

MONROE CITY, Mo. | Shane Spalding spent nearly all his work time last week prepping for the rollout of the small business program that is part of a $2.2 trillion stimulus program that took effect on Friday morning.

Spalding, the Monroe Citybased regional president for Alliant Bank, said that SBA lenders are learning details of the stimulus almost in real time as they have been developed over the last week in an effort to jumpstart an economy that has stalled.

“We have worked almost nonstop on getting ready for the stimulus,” Spalding said. “We have our first application ready to go for a client.”

As the federal government scrambled last week to develop rules for the stimulus, the depth of issues on Main Street grew deeper in just a period of two weeks. Since the beginning of March, businesses across Northeast Missouri, the state and the nation have closed their doors as social distancing to fight the spread of COVID- 19 caused economic activity to grind to a halt almost overnight.

The jobless numbers in just two weeks are staggering. In Missouri, for the week ending March 28, the state Department of Labor reported that first-time jobless claims for unemployment insurance hit 104,230, up from the 42,207 for the week ending March 21. During February, there were 11,305 claims for the entire month. There were more than 6 million jobless claims nationwide.

On Thursday, about 80 businesses participated in a webinar hosted by State Sen. Cindy O'Laughlin, RShelbina, with the Small Business Development Center's Kirksville office, to receive details on small business provisions of the stimulus approved by Congress and signed into law by President Donald Trump on March 27.

O'Laughlin said she arranged the webinar to answer questions she was getting from business owners about disaster assistance, saying that she wanted to make certain that small businesses know how to navigate the bureaucracy” because businesses need immediate assistance.

“We operate a small business, so I understand the pressures,” she said.

During the webinar, Carolyn Chrisman, director of the Kirksville SBDC office, said that in the week since the stimulus plan was signed into law, there have been changes about how the $350 billion earmarked for small business would be distributed.

“Things are changing constantly,” she said. “Anything we tell you today about that program, some things might change by tomorrow when the banks open up. We just want you to know that it is a fluid situation.”

Small business assistance is available through the so-called CARES Act. There are two major initiatives of the act – the Paycheck Protection Program and Economic Injury Disaster Loans. The programs are loan guarantees that are in some cases forgivable.

As with all small business lending through SBA programs, participating banks administer the programs and make the loans, with guarantees from the SBA, based on specific guidelines.

Spalding said that lenders had received changes less than 12 hours before applications were accepted through the CARES Act.

“In my 19 years in banking I have never seen things move this quickly with a government program,” Spalding said.

In the seminar, the SBDC outlined the basics of both programs. For economic disaster loans, known as EIDL, provisions include:

• Funds are used to pay employee benefits, business obligations and operating expenses resulting from COVID-19 business disruption.

• It is a low-interest loan of up to $2 million.

• Sole proprietorships, independent contractors, co-ops, ESOPs, 501 (c) 3 entities, and nonprofits, excluding schools and religious organizations can qualify for the loans.

• $10,000 is available as a grant/advance that does not have to be repaid.

Under the paycheck protections, known as PPP:

• Businesses can apply under PPP and the EIDL, but not for the same expenses.

• Loans are meant to keep all a company's employees working for up to eight weeks, from a window of Feb. 15 to June 30.

• Small businesses, 501(c)3s, 501(c)9s and sole proprietorships can apply.

• Maximum loans can equal 250% of average monthly payroll costs.

“The application is very simple and focuses on a declaration that this is the payroll and expenses” caused by COVID-19, Chrisman said.



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