PROVIDENCE – Chris Bicho originally anticipated making a second round of layoffs on Friday.
Amid the abrupt economic shutdown, the owner and founder of Newport-based Landings Real Estate Group had cut 28 people from his staff of 78 and planned to lay off another nine.
But after learning he would be receiving the much-anticipated paycheck relief loan on Friday, part of the U.S. Small Business Administration’s Paycheck Protection Program, Bicho changed course. He halted layoff plans and after signing the promissory note with his lender, Centreville Bank, called back all the employees he laid off to give them their jobs back.
Bicho was among the very first PPP loan applicants through Centreville Bank – and possibly in the entire state – to receive funds through the forgivable loan program aimed at helping small businesses cover payroll expenses for the next eight weeks.
The chaotic rollout of the federal relief program left many local lenders scrambling to process a surge of applications, while applicants waited with bated breath for the money to hit their accounts. News reports indicate many are still waiting – both to submit their loans and even for those who have received SBA approval, to get the funding.
Having closed and deposited funds into a handful of the earliest approved applicants’ accounts on Friday, Centreville Bank plans to ramp up distribution this week, according to Justin DeShaw, senior vice president and chief lending officer.
Other local lenders, including The Washington Trust Co. and Pawtucket Credit Union, had not begun closing approved loans as of Monday afternoon but similarly anticipated speeding up the final stages of distribution over the next few days. Information on the status of other lenders’ distribution plans, including Citizens Bank, was not immediately available.
While lenders were working hard to help small business borrowers get the funding they need to keep or rehire employees, federal guidelines about the program remained unclear. Specifically, the legislation passed by Congress and the updated final rule provided by the U.S. Department of the Treasury contradict one another with regard to details of the loan forgiveness, DeShaw said.
While he was not worried about what the contradiction meant for Centreville as a lender – the SBA has made it clear it will back the loans – it made it difficult for him to answer questions from worried borrowers.
“I don’t like being in a position where I don’t have the answers yet,” he said.
Among the questions – what happens if an approved borrower is unable to hire back all of its laid off employees? Will there be a pro-rated-style forgiveness based on the percentage of the workforce they can retain or rehire? What about seasonal businesses and those in industries under forced closure?
DeShaw hoped additional guidance would answer these questions and pledged to continue “plowing ahead” with getting money out as fast as possible.
“Congress had a clear intent and as much as it’s against our nature as bankers to try and guess the rules of play, the intent is to get this money on the street and get people back up and running,” he said.
While the initial inundation of inquiries and applications has slowed since the program opened on April 3, the pace remains steady, and could see another wave of interest if and when Congress approves more money for the program. As of Sunday, the American Bankers Association reported that $205 billion in loans had been processed, leaving $145 billion of the original allocation still up for grabs.
And with the program only opening to independent contractors and self-employed workers on Friday, another spike in demand was very possible, according to Mark Gim, president and chief operating officer of Washington Trust.
As of Monday, Washington Trust reported 500 loan applications had been submitted and authorized, out of 1,200 “indications of interest.”
Centreville reported 130 approved applications totaling $34 million.
The SBA has not made data available for states or regions since April 6, when the Rhode Island District Office reported local lenders submitting 700 loans totaling $250 million.
While Bicho was grateful to be among the first recipients, he also worried about the still-unclear terms of the forgiveness loan and hoped for leniency.
“We don’t have time for details,” he said. “We’re in a desperate situation here.”
Bicho also worried about what would happen when the eight-week forgiveness period on the loan runs out, noting that much of his business depends on the hospitality industry which may not be up and running again at that time.
“If the economy is still not open, we’re in the same situation again,” he said. “Either we have to reopen the economy or the government is going to have to supply some more stimulus funding.”
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
