The Paycheck Protection Program, a forgivable loan made available to small businesses at the start of the COVID-19 pandemic, now has a new application for borrowers in order to make the loan forgiveness process easier.
“Essentially, they’ve tried to streamline the loan forgiveness process,” said Adam Snodgrass, president and CEO of Iowa States Savings Bank. “The new application requires less documentation and fewer calculations than the previous application.”
The program is currently set to expire June 30, so many borrowers have begun to move to the forgiveness part of the loan process. Snodgrass said ISSB has had a couple of applicants each week for the last couple of weeks, with the bank having issued 103 loans in total so far.
Snodgrass said they received information about the new application form Wednesday and are in the process of getting it out to borrowers who qualify.
“It is a tremendous help to borrowers that qualify to use the short form,” said Snodgrass. “I mean, the letters ‘E-Z’ are attached to the application. This has provided relief to those borrowers so they don’t have one more thing to worry about while trying to stabilize their business during the pandemic.”
There are three criteria which a borrower must qualify for at least one of in order to use the E-Z application.
• The borrower applied for the loan as self-employed, an independent contractor or a sole proprietor with no employees.
• The borrower did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees, except laid-off employees who refused to return.
• The borrower did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
Snodgrass said they believe this application will benefit around 90% of ISSB’s borrowers.
“They’re calling this streamlining, and I think that’s what it does. It streamlines the process for the majority of borrowers,” said Snodgrass. “That’s been expected for a long time, for the last month or so anyway, because we are starting to see a lot of borrowers move into the loan forgiveness phase since it’s been past the 8 weeks in which the funding they received was intended for.”
Applicants who took out the loan at the very beginning would have ran the course of the funding by the beginning of June said Snodgrass. The Small Business Association has been providing updates to the banks a couple times a week to provide new guidance and clarification, but currently there have been no set plans for expanding the program.
“The demand for the loan has dropped off the last few weeks because so many businesses that could use the money were quick to apply and already received the loan,” said Snodgrass. “Especially in our area I think.”