The U.S. Small Business Administration (SBA) on Thursday evening issued further guidance to federally backed financial lenders across the country related to a provision within the recently enacted coronavirus (COVID-19) stimulus package that will benefit small businesses.
The funds are part of the SBA’s Paycheck Protection Program (PPP), a $349 billion component of the relief package.
Businesses with 500 or fewer employees are eligible to receive the lesser of $10 million or 2.5 times its average payroll over the period of several months. If certain conditions are met, up to 100% of the principal on the loans will be forgiven.
Yellowhammer News on Thursday afternoon reported that banks were still awaiting guidance from the SBA on how to proceed in regards to the PPP, even though the loans were to become available on Friday morning.
“Banks across the nation are literally waiting for instructions from the government on how to move forward,” outlined Scott Latham, president and CEO of the Alabama Bankers Association, in a statement. “While we are grateful for the help, we are frustrated that those needing help the most are forced to suffer while the rules are still being written. Banks across Alabama have a strong reputation of helping individuals and small businesses during good times as well as the challenging times, and this difficult period will be no exception. Until the rules are final, we are simply in a waiting game that is out of our control.”
Following that statement, the SBA did indeed issue an official memo announcing the interim final rule implementing the PPP.
Jared Ross, president of the League of Southeastern Credit Unions and Affiliates (LSCU), was one of the national financial services leaders on the receiving end of that memo, which can be read in its entirety here. The Alabama Credit Union Association (ACUA) is an affiliate of LSCU.
That memo featured specific guidance related to the PPP for federally-insured credit unions. Additionally, the memo answered critical questions for all lenders, including the all-important, “Can lenders rely on borrower documentation for loan forgiveness?”
In a tweet, Credit Union National Association CEO Jim Nussle said that the organization’s “advocacy and badgering… paid off” in the form of the memo being issued and offering necessary, initial guidance.
Ross told Yellowhammer News in a statement, “Credit unions are always ready to help their members and communities and this has never been more evident than now.”
“We understand many small businesses are eager to take advantage of the SBA’s Paycheck Protection Program and many credit unions are just as eager to help. This is a new process that we are all trying to figure out right now, but credit unions have been very proactive in trying to help their small business members and I encourage all applicants to be patient as we work through the kinks,” he continued.
Ron Summerall, president and CEO of the Alabama Teachers Credit Union, advised Yellowhammer News that work was ongoing locally as well in regards to figuring out the PPP ins-and-outs.
“Alabama Teachers has worked extensively with the Birmingham SBA Office this week,” Summerall stated. “They have gone above and beyond in an effort to help navigate our credit union through this complex process. With only a few items remaining, and with their guidance, we hope to be processing and funding Payroll Protection Plan loans for our small businesses very soon.”
RELATED: Alabama credit unions ‘remain open and ready to serve’ during coronavirus pandemic
Governor Kay Ivey earlier this week called on Alabama small businesses to immediately contact “their local banker, accountant, financial advisor or credit union” regarding PPP funding.
“I urge business owners to act today and be prepared to apply for assistance designed specifically to get them in front of the line when relief checks are written,” Ivey said.
A detailed breakdown of the Paycheck Protection Program is available here.
Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn
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