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After processing almost 30,000 Paycheck Protection Program loans in one week, Connecticut lenders continued to work through thousands of applications. But even as community banks and credit unions have worked to provide businesses with this critical resource during the coronavirus pandemic, not all small business owners can benefit from the program.
The U.S. Small Business Administration approved loans for 5,070 Connecticut small businesses and nonprofit organizations during the week ending May 8, for a total of $168.8 million, according to the SBA. The previous week, which marked the start of the second round of PPP funding, 29,559 Connecticut small businesses had received loans totaling $2.557 billion.
While waiting for Congress to approve additional funding for the program created by the CARES Act, many banks and credit unions continued to accept applications from small businesses, anticipating that the program would continue.
After the program originally launched April 3 and closed less than two weeks later when funding ran out, 18,435 Connecticut businesses had received about $4.15 billion in loans.
Connecticut lenders in all of fiscal year 2019 had processed a total of 776 SBA loans, according to the SBA’s Connecticut district office.
Community Banks’ Efforts
During the PPP’s first round in April, lenders – especially large banks – were accused of prioritizing loan applications for certain clients. Several publicly traded companies received loans as well, while many smaller businesses reported that their applications were not processed.
The average loan size in the first round was $225,000 for Connecticut businesses. The second round’s average loan size is about $78,000. Based just on last week’s volume, the average loan size was about $33,000, suggesting more of Connecticut’s smaller businesses got through the process.
While large banks received much public scrutiny for their policies during the first round of funding, community banks have been touting their efforts in the program.
New Haven Bank, a community development bank with about $147,000 in total assets, had processed $12 million in loans for more than 110 small businesses through May 1, according to a statement from the bank.
“Over the past several weeks, New Haven Bank has worked tirelessly to ensure we are providing the support and stability to businesses to help strengthen the community,” Maureen Frank, New Haven Bank’s president and CEO, said in the statement. “The bank’s efforts to date truly reflect our commitment to promoting economic strength, vibrancy and growth.”
Collinsville Bank, Litchfield Bancorp and Northwest Community Bank – all part of the Connecticut Mutual Holding Co. – have together received loan approvals for about 485 small businesses during both rounds of funding through May 11. The banks, which combined have less than $1 million in total assets, have processed loans for almost $45 million. The average loan amount was about $88,000.
“The three sister banks’ effort reinforces the unique and valuable role a community bank offers to the companies it serves,” Gary Roman, president of Collinsville Bank, said in a statement. “Customers are able to quickly contact and speak to our staff to ensure they get the personal support and responses they need.”
Some Businesses Missing Out
In all more than 53,000 Connecticut businesses have been approved for PPP loans. But Connecticut had almost 347,000 small businesses last year, according to the SBA’s state profile, suggesting that many are not taking advantage of the loans. If business owners keep or rehire staff – using 75 percent of the proceeds for payroll and the rest for approved expenses – the loan can be forgiven.
In a May 6 letter sent to congressional leadership, Connecticut Attorney General William Tong and more than 20 other attorneys general pointed out issues with the PPP and requested updates to the program. The seven-page letter included concerns that some small businesses, including restaurants and sole proprietors, use less than 75 percent of revenue on salaries, making it unlikely the owners would qualify for forgiveness.
Restaurants and other businesses that cannot open at full capacity might not be able to rehire all staff within the eight weeks specified by PPP guidelines. Small businesses that don’t meet the requirements would need to repay in two years amounts not forgiven.
The attorney generals, led by Maura Healey of Massachusetts, said the program needs more flexibility.
“Some businesses have already been forced to lay off some employees and may have difficulty bringing them back within the time limits currently set out in the program; this is deeply troublesome and goes to the heart of the problem that the PPP should seek to address,” the attorney generals said. “Small businesses should not be unduly penalized for having made this difficult choice and will need flexibility to have enough time to rehire their full staff.”
