Banker Says Trump’s PPP Loans Saved US Businesses, It’s Back Under Biden

Banks that provide Federal Paycheck Protection Program (PPP) forgivable loans begin accepting applications this week businesses and other employers for $ 147 billion in new funds approved by Congress and President Trump, plus money left over from last year’s program.

“We’re going to launch more PPP loans,” said Vernon Hill, chairman of the Philadelphia-based Republic Bank, which has loaned more than $ 700 million under the initial program and its summer extension.

“We don’t see the rush we saw last time around,” said Chad Palank, regional director of business and professional banking at M&T Bank, which the SBA says has made more PPP loans in the region. than any other lender last year – 1,100, worth $ 443 million.

He said the bank had prepared to deal with requests from people who are not already customers, as well as former borrowers. New rules allow more nonprofits – even chambers of commerce and local business associations – to apply for PPP money and make it easier for some restaurants to qualify.

The national PPP program in 2020 lent $ 525 billion (of an authorized amount of $ 659 billion) to more than 5 million commercial borrowers, through banks and other lenders working with Small Business Federal administration. Treasury Secretary Steven Mnuchin said those borrowers employed more than 50 million Americans, suggesting the program helped prevent record unemployment.

Investigator analysis showed that 81,000 businesses and other employers in the Philadelphia area, employing nearly 800,000 workers, borrowed a total of nearly $ 10 billion under the program last year.

Businesses can borrow up to $ 10 million, or two and a half times their payroll, whichever is less.

A restaurant or hospitality business can borrow three and a half times its payroll under new rules, a concession to complaints from owners that they could not cover food and other key costs under the P3 program. original.

Businesses that borrowed last year can borrow up to $ 2 million more, if they used the original loan. The SBA has set a new condition: Borrowers must show that their sales have fallen by at least 25% in a three-month period last year.

As promised, the government began to forgive loans to borrowers who used the money to pay workers, homeowners, and other approved uses. The latest round of PPP funding began the week of January 11 at small nonprofit community development financial institutions, followed by banks this week.

“We’re seeing a lot of requests from manufacturers,” said Palank of M&T. He noted that a number of companies returned the money last year, without waiting for a refund, once they realized that their business had not been as badly affected as it was. feared.

“The PPP is a great plan. I told the President it saves America’s small business and mid-sized business community, ”said Hill, a former Trump golf partner, who was a major deposit client of the previous Commerce Bank of America. Hill. At Republic, PPP loans accounted for more than a quarter of total loan volume at the end of last year.

Unlike the rush of P3 requests reported by bankers last spring, says Hill, “this was not the flood that we saw the first time around. They fixed some bugs. They are particularly targeting restaurants and hotels, which have been hit the hardest, ”by the COVID-19 public gathering restrictions; and eliminated a previous requirement that made it more difficult for seasonal shore and resort restaurants to borrow – following a request by Hill and other shore bankers to federal officials, “which I have to take credit for. merit, ”he said.

In addition to for-profit businesses and religious employers, the new program has been made easier for registered nonprofits and Native American tribes, Hill said.

Hill says the program is structured so that lenders can reserve a modest profit on each loan, compared to what they do on private loans (although the government pays for canceled loans, there is less risk of loss.)

Despite several reports elsewhere, Hill said his bank had received few apparently fraudulent claims.

While the program has helped the majority of small businesses nationwide, according to SBA data, Hill said it has also proven particularly useful for small-business-focused banks like Republic, who feared the closure of the antivirus does reduce the volume of loans and profits.

Hill noted that smaller banks launched their original PPP program faster than large banks such as Wells Fargo, although large banks ended up posting by far the highest volume of loans in the program.

While PPP is “the best thing the government has done for businesses in years,” Hill said the lingering problem, especially for restaurants, is “they don’t know when they can reopen for real. . It’s bad here and it’s worse in New York.

Two industries that have unexpectedly thrived under virus restrictions, Hill said, are pet dealers and golf courses. “Golf courses have gone crazy because they are one of the few things that don’t face a lot of public restrictions. And there are no more dogs for adoption in America, ”added Hill, who made pet-friendly branches a marketing argument at Republic. “Everyone at home wants one.”