First Financial Bank branch in Jeffersonville. (photo courtesy: Steve Ziegelmeyer)
First Financial Bank is headquartered in Cincinnati. (photo provided)
The Trump administration is asking lawmakers for another $250 billion to help small businesses as they struggle to survive during the pandemic by paying employees and keeping them off the unemployment rolls.
This new round of funding would be on top of the $350 billion that is already earmarked for the Paycheck Protection Program through the CARES Act.
“The earlier you get in, the better,” warns Jeff Magginnis, senior vice president of Cincinnati-based First Financial Bank. “The dollars will run out.”
The program went into effect last Friday. Magginnis says the SBA informed banks Tuesday that it had already approved 208,000 applications, accounting for $78 billion.
“We anticipate within the next week or 10 days that money will be used up,” says Magginnis. That is one reason why the U.S. Treasury Department is asking Congress to act quickly to replenish the fund.
“We got 500 applications just inside of a couple of hours. We have actually received over 4,000 applications now and over a billion dollars in loan requests already from the program. And that’s just for our banks,” says Magginnis, who stresses applicants should not wait.
The PPP, which is administered through the Small Business Administration, provides a forgivable loan to small businesses that qualify for the funding by providing up to eight weeks of payroll.
“Seventy-five percent must go towards payroll,” says Magginnis. “It also covers, for most clients, mortgage interest on a commercial building loan, rent and utilities. But payroll is the dominant use.”
Magginnis says the SBA program is geared particularly towards restaurants and the hospitality sector, but any small business, self-employed individuals, independent contractors can apply. He says even nonprofits, such as churches, can seek out the funding.
“Churches are not normally allowed in the SBA program, they’re actually eligible,” said Magginnis.
The SBA is being very liberal on the PPP by not requiring collateral or personal guarantees. Forgiveness is based on the employer maintaining or quickly rehiring employees.
While the program started accepting applications last Friday, Magginnis says private contractors and self-employed individuals are not technically supposed to apply for the loan program until April 10, but Magginnis encourages those people to reach out to their banks. “Be aware of their processes.”
Magginnis says a little-known aspect of the CARES Act is loan forgiveness for businesses who had previously borrowed money from the SBA.
“Congress directed SBA to pay six months of payments for all borrowers in the SBA program,” explains Magginnis.
He says SBA rules are still being finalized, but it is intended to begin immediately.
“These are six months of payments interest, principal and associated fees and no obligation to repay in the future, which is fantastic for the borrower.”
First Financial Bank has 71 branches in Indiana.
Magginnis tells Inside INdiana Business customers are concerned about their businesses, but help is available.