Paycheck Protection Program graphicPaycheck Protection Program graphic

The Paycheck Protection Program that is part of the federal government’s $2.2 trillion economic stimulus plan is off and running. A Lafayette bank had processed 200 applications by midafternoon Friday.

Nationally, about 4,000 Paycheck Protection Program loans had been submitted to about 400 banks for a total of $1.4 billion. The Advocate reported that more than 650 customers in Louisiana and Texas had shown interest in participating in the loan program.

The program will provide two-year loans of up to $10 million at a 1 percent annual rate. The loans are to be used by businesses to meet payroll and certain operating expenses, including rents, mortgages and utilities. They can be forgiven if at least 75 percent of the loans are used to cover eligible payroll.

Companies hurt by the coronavirus pandemic hope to take advantage of the Small Business Administration’s (SBA) $349 billion program. Those same companies can also apply for the SBA’s Economic Injury Disaster Loan, which can be up to $2 million for 30 years at 3.75 percent interest.

A bank official told the newspaper businesses could apply for both as long as they are careful about how they use the proceeds. He offered the following advice to the businesses:

“Start with the disaster loan and you’ll get a check from the government within about a week for $10,000,” he said. They should also apply for the Payroll Protection Program loan and use it just for salary, he said, “and in seven weeks, apply to get it forgiven.”

More than 90,000 people have made new unemployment claims in Louisiana in the past two weeks as companies across the state cut staff, furloughed workers or shut down entirely because of the governor’s order that all nonessential businesses close.

Adam Knapp, CEO of the Baton Rouge Area Chamber, said once banks get approval from the feds that they have approved the loans; the companies will get the cash.

One bank official said the biggest concern is the ability to process applications before funds are no longer available. The process is expected to pick up after the SBA made it clear that banks would not be liable if borrowers submit inaccurate payroll information.

Once the banks got clear guidance from Washington, D.C., officials, almost 60 lenders across the state were able to make the loans. Many Louisiana businesses are hurting, and these programs appear to be the answer to most of the problems they are facing. We wish them well.