A small business owner walks into a bank and applies for a PPP loan...stop me if you've heard this one...

We had the amazing opportunity to sit down with a local bank manager who braved the challenges of being at the forefront of disbursing Payment Protection Programs loans (“PPP loans”) during the peak of the COVID-19 pandemic. The bank manager recounted stories about how they spent over sixteen to seventeen hours a day, while the banks were closed to the public, to disburse PPP loans ensuring that local small businesses could stay afloat. 

Taylor Law: What is your responsibility regarding PPP loans? Also, what is a PPP loan?

Bank Manager: I’m a bank manager so I have overseen and helped process PPP loans for local, small businesses over the past year. PPP loan disbursement started around mid-March in 2020 when the COVID-19 pandemic hit. Small businesses were forced to shut down their offices and operations, so the U.S. Small Business Administration (“SBA”) created the PPP loan program which helped small businesses to continue making their payments for their lease, payroll, and utilities. Small businesses are considered any company that has up to 500 employees. 

Taylor Law: Why would a small business apply for a PPP loan?

Bank Manager: They would apply for a PPP loan to survive dwindling income during the pandemic. By applying for a loan, they would be able to make their payments to their employees. Let’s take a local Thai restaurant as an example. A restaurant has part-time and/or full-time employees such as a chef, host, and sanitation workers who all need to be paid so they can afford rent and other basic living expenses. Since the restaurant is closed, naturally, the business doesn’t have any earnings, so the business doesn’t have the funds to pay its employees. SBA helps the restaurant owner to borrow PPP loans to pay the employees while the restaurant is temporarily closed. 

Taylor Law: How does one apply for a PPP loan? What kind of limitations does the PPP loan have? 

Bank Manager: The limitations of applying for PPP loans is that the business must have certain documents. The business must have proof that they had earnings in 2019 by providing tax returns or quarterly income documentation which show the average earned. Based on those twelve months, the bank would give them money to survive the rest of 2020. The SBA decided to forgive businesses’ payroll payments. So, the portion of the loan that was used for payroll was forgiven by the SBA as long as they could prove that they paid staff and employees, had tax returns and IDs, and proof of ownership. Then, we cut a check in the name of the small business which was deposited into their small business account. In 2021, if a small business was eligible for forgiveness, the bank sent them a document that required they must show how much and when they paid employees using payroll money. Then, the bank sends the SBA the proof of payroll and all that’s left is for the SBA to agree to approve the forgiveness, so the small business won’t have to pay back a certain amount.

Taylor Law: Can you give me examples of how PPP loans affected local small businesses?

Bank Manager: A small private school run by thirty employees who provided education to children with disability which was closed during 2020, was granted the PPP. The school was able to pay all thirty of its employees, lease of the building, and water, gas, and utility bills. Other examples of small businesses who we helped receive loans while having no income are restaurants,churches, mom-and-pop shops, hair salons, nail salons, auto shops, concert venues, and ice cream shops.

 Taylor Law: When do you anticipate PPP loans ending?

Bank Manager: The future is uncertain. Currently, the government’s concern is helping the businesses and economy get back to where it was before the pandemic. We did one round of PPP loans in 2020 and another in 2021 Fortunately, it looks like the businesses are little by little returning to normal. As long as the COVID-19 pandemic and its variants whittle down, it is likely we will not need to disburse anymore PPP loans. 

As always, ping Taylor Law PLLC for any of your small business legal needs.