When the U.S. government first rolled out forgivable loans to small businesses in early April under the Paycheck Protection Program, loan officers at Bank of the West in Grapevine, Texas worked nights and weekends to process a tsunami of applications.
FILE PHOTO: An employee of Farley’s East cafe, that closed due to the financial crisis caused by the coronavirus disease , carries donated food items after being laid off from the cafe in Oakland, California, U.S. March 18, 2020. REUTERS/Shannon Stapleton/File Photo
Many of Bank of the West’s PPP borrowers haven’t touched their PPP loan deposits, which total $87 million, Blankenship says, partly because they are confused about the terms. “I think it’s a mixture of uncertainty and anxiety and fear, and the uncontrollable factor about employment and rehiring.” The SBA does not provide estimates of how many jobs have been protected by the 4.4 million loans made to date under the program.Business owners first saw the program as a lifeline during the coronavirus crisis. They are now worried that confusing and changing rules may keep them from converting the money to a grant, meaning they will need to pay it back.
But even as states like Texas reopen, health authorities are limiting capacity at restaurants and retailers, and customers have been slow to return. Some companies have opted for the Employee Retention Tax Credit , also created by Congress in March, because it provides more certainty than the PPP, says Main Street Alliance’s Sarah Crozier. The ERTC, a refundable tax credit against wages paid, cannot be combined with a PPP loan, and essentially acts like a payroll subsidy.Public companies have returned a total of $453 million in PPP loans, according to data compiled by FactSquared.
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