The CARES Act has established a new $349 billion Paycheck Protection Program that is designed to provide much-needed relief to millions of small businesses so they can sustain their operations and keep their workers employed during the coronavirus crisis. To explain how the program is going to work and what small business owners need to do to benefit from it, Newell invited the Small Business Administration’s Louisiana District Director Mike Ricks onto the program Friday morning.
“Mike, we are getting a lot of calls about the different programs that we want to hear you opine on,” Newell began. “Where to start?”“The Paycheck Protection Program is fresh on everyone’s minds,” Ricks said. “I’m proud to say we are already making loans under this program here in Louisiana, mostly due to the proactive steps that my staff has taken to make sure we had our lenders ready and prepared on legacy systems to submit this application. I know there are a lot of lenders out there interested in participating, and they’re still waiting on program guidance from the SBA. Delegated express lenders who are current and operating on E-Tran, they are submitting these loan applications to the SBA and getting numbers back immediately. We’re still working on the lenders that aren’t on our system, but the lenders with existing authority can make these loans in just one day.”
“I think originally there was some tug-of-war between the banks and Treasury as to what was put in the application needing to be certified by the bank,” Newell continued. “I think that’s been waived, so the borrower has to bear whatever comes down if they falsified information on the app so you can get to a closing a lot cleaner, and then go back and look at what’s truthful in the aftermath… is that correct?”“That’s correct,” Ricks confirmed. “It’s going to be incumbent on the borrower to make sure they’re in compliance with regulations, one of which is going to be that they’re not taking loans from two different Federal sources for the same purpose. That’s illegal, you can’t do that. We will have steps in place to try to mitigate that but what we’ve got right now is something that is unprecedented. I’ve been working for the Federal government, the Army, Marine Corps, now the SBA for going on 30 years and I have never seen a law signed and implemented in a week. It’s a remarkable achievement. I know there’s going to be glitches and there’s a lot of loose ends and questions that need to be answered, but if you’re a borrower and you take out a PPP loan and are requesting, as a use of proceeds on that loan, salary and other expenses, that’s fine. If all you’re using is the PPP loan program you’re not going to have any issues.”“Is there going to be an updated list of banks that are participating with SBA? There seems to be a lot of the big banks that aren’t on this list. Are they participating SBA lenders?” Newell asked.
“They are participating SBA lenders, but we cannot force them to participate in any one of our programs,” Ricks said.
“Do we know, or has your office reached out to them to get a commitment one way or the other?”“We have, and we’ve been talking with our lenders for the last two weeks on this program,” Ricks continued. “I will tell you honestly that a lot of the lenders are concerned about using this program in the absence of clear guidance, and that’s on us, we need to give that to them. We can get them on board, we just need to give them some assurances that if they use this program, they have the backing of the SBA.”