Most PPP borrowers see emergency loans canceled during pandemic


The federal government’s paycheck protection program has provided businesses and nonprofits with loans to pay their employees during the coronavirus pandemic, with the option of asking for forgiveness later.

To avoid making payments, recipients must request this rebate within 10 months of using the funds.

This deadline for first borrowers has come or is coming to an end. So, do beneficiaries apply? And are their loans canceled?

The answer to both questions is a definite yes, according to bankers, accountants and federal officials involved in the program. The vast majority of Connecticut borrowers ask for timely forgiveness and have their debts written off, said Catherine Marx, Connecticut District Director for the Small Business Administration.

“I don’t have pardon data by state at the moment, however, we have regular discussions with banks about the process, and it’s going well,” Marx said.

In total, Connecticut companies have received more than 55,000 PPP loans worth $ 3.2 billion, according to the SBA. The program had two streams, the first in 2020 and a second round of funding earlier this year. Although there are no specific figures available for Connecticut, 3.3 million of the 5.3 million PPP loans approved nationwide in 2020 had been canceled as of May 24, according to the SBA.

Now the SBA is set to streamline the forgiveness process even further, Marx said. Until now, lenders had to go to issuing banks, which reviewed their applications and sent them to the SBA. Starting August 4, entities with PPP loans of $ 150,000 or less will be able to apply directly to the SBA through a new portal on its website, Marx said. By eliminating a step, it will make the process easier and faster, she said.

“With the new streamlined application portal, thousands of Connecticut businesses and even individual businesses that have borrowed PPP funds will see those funds canceled,” she said. “Most of the businesses in Connecticut awaiting forgiveness have loans of $ 150,000 or less. It was time we made the process more efficient so that businesses could start supporting our communities again. “

“Everyone has been forgiven”

Gary Martin, a partner at FLP Accounting and Tax in Southington, said his clients were happy with the forgiveness process. While it can be slow, pretty much everyone is approved of, Martin said.

“As long as you have your documentation, it’s pretty straightforward,” he said.

Brian Kerrigan, a consulting partner at Hartford-based accounting and consulting firm Whittlesey, said his clients had had the same experience.

“I only saw one conditional denial and that conditional denial was that they needed to get more information,” he said. “Almost everyone has been forgiven.”

A key to the forgiveness process is reminding borrowers that the deadline is approaching, said Ion Bank CEO David Rotatori, whose Naugatuck-based community bank has underwritten about 3,000 PPP loans for a total of $ 285 million.

His bank has reached out to borrowers to let them know when and how to ask for forgiveness, Rotatori said.

It’s easy [for the borrower] forget, ”he said. “We have been fairly proactive.

Marx noted that the forgiveness process becomes more complex and longer for loans of $ 2 million or more.

“As it should be, because we are dealing with taxpayers’ money and we want to make sure the process includes minimal waste, fraud and abuse,” she said.

Important lifeline

The SBA relied on the banks to implement the PPP program. The banks made the loans out of their own funds and the SBA guaranteed them. Borrowers had eight to 24 weeks to spend the funds and 10 months after that to request a rebate. Once the loan is canceled, the SBA reimburses the bank that issued it.

Even if they miss the deadline to avoid payments, lenders can still ask for a rebate, according to Kerrigan.

“You can apply for a forgiveness until the maturity date of your loan,” he said.

Everyone involved said the program was a great success, possibly saving thousands of Connecticut businesses that would otherwise have gone out of business. Although it got off to a rocky start, the program quickly found itself on a solid footing, accountants and bank officials interviewed for this story said.

“It went really well,” Kerrigan said. “You have to consider that the government put this in place and deployed it in three weeks. They were able to invest $ 670 billion in small businesses. Was it perfect? No. But I think overall they did pretty well.

Marx praised the banks that partnered with the SBA. In the face of a tsunami of loan requests, bank workers mobilized, she said.

“These institutions have gone above and beyond to save thousands of Connecticut businesses,” she said. “Their loan teams worked day and night to process these PPP loans in 2020, then they turned around and started again in 2021. We are very grateful to them.”


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