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Why banks put PPP forgiveness first



The Salary Protection Program’s forgiveness portal made its debut, giving bankers and their borrowers major decisions.

Those who participated in the $659 billion plan must determine whether they are now ready to deal with a complex system to forgive loans, or whether it is necessary to wait and see if Congress intervenes and simplifies the process. Last weekend, discussions about a new round of stimulus plan broke down, complicating the decision, which made people doubt when or whether the PPP will undergo radical reforms.

Many banks, including JPMorgan Chase, plan to postpone the processing of applications. JPMorgan Chase is the largest participant in the plan, with PPP projects of US$29.2 billion. Kimberly Hooks, vice president of Chase Business Banking, said the $3.2 trillion banking giant will begin the forgiveness process next month.

JPMorgan Chase supports the promotion of automatic forgiveness, “this will help thousands of small business owners get back on their feet,”

; Hawkes added.

Holtmeyer & Monson of Memphis, Tennessee is providing 12,000 PPP loans to 450 banks, taking a similar wait-and-see approach.

The company’s president and co-founder, Arne Monson, said: “We had hoped to actively start accepting applications today, but we decided to postpone it.” “We hope to get loans of $150,000 and below like hell. Automatic forgiveness, and may be streamlined [process] Those who do not exceed $2 million. “

An SBA spokesperson confirmed on Monday that the agency’s platform has begun accepting applications for forgiveness as planned, even though she did not provide any statistics on open day activities.

After Congress failed to extend the operating authority of the program, the SBA stopped accepting new “salary protection” loan applications on Saturday. Parliamentarians are considering many proposals for resuming the PPP, including increasing funding to allow the worst-hit small businesses to obtain a second loan.

The willingness of lenders to delay, even if it means delaying the settlement of billions of dollars in loans, is not surprising to many industry observers.

Before the portal closed, the SBA approved approximately 5.2 million PPP loans, amounting to more than US$525 billion. The program provides low-interest loans to small businesses affected by the coronavirus pandemic. Funds used for basic operating expenses are eligible for forgiveness, which makes the program more attractive to troubled entrepreneurs, but the process has been difficult, characterized by delays and unclear guidance.

The forgiveness process is stressful for borrowers and lenders.

The SBA did not issue a forgiveness application until mid-May (nearly six weeks after the loan was approved). A month later, after criticizing the original 11-page application for being too long and complicated, the agency simplified the form for self-employed borrowers and those who had not reduced their employees’ wages by more than 25%.

Prior to the release of the forgiveness platform on July 23, the SBA had never indicated where lenders could submit their applications.

The chaos throughout the process prompted groups of bankers to lobby for a package or automatically forgive small loans. The lawmakers are considering making several bills for this purpose.

At the same time, more and more lenders choose to bypass this problem by selling their PPP investment portfolios.

Other companies, such as Holtmeyer & Monson and the $19.8 billion Atlantic Union Bank stake in Richmond, Virginia, chose to outsource most of the forgiveness process. Monson said his company turned to Boston’s team of certified public accountants for help to answer customer questions. It signed a contract with Summit Technical Consulting Group of Mechanicsburg, Pennsylvania, to package the application for submission.

This arrangement “provides Cadillac solutions for our customers,” Monson said.

Not every bank is waiting for parliamentary measures.

First Choice Bancorp, with $2.2 billion in assets, opened its online forgiveness portal to borrowers on July 2 and plans to start uploading apps to the SBA “in the near future.” Its chief strategy officer Lorraine Lee Say.

President and CEO Robert Franko added that First Choice has approved nearly 1,900 loans totaling $400 million and “will definitely submit forgiveness applications immediately.” “We want to provide peace of mind to customers who are ready to submit information.”

For another community bank, Green County Bank, which has assets of $1.7 billion in Catskill, New York, has no one-size-fits-all forgiveness solution. The company is ready to share the difference between submitting and retaining its Paycheck Protection loan.

Greene County provided 1,260 PPP loans for $100 million, and he believes many of these transactions can be forgiven immediately. However, in some cases, “it may make more sense to have some of our customers wait for further announcements,” said Sean DuBois, vice president of commercial loans and business development.

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