Sept. 11, 2020 (Courtesy of the Jacksonville Business Journal) First Coast financial institutions anticipate more efficiency in processing Paycheck Protection Program loan forgiveness applications compared to the frenzy that occurred in the first days of application period for the loans.
While some institutions are holding off on processing forgiveness applications as they await additional guidance from the Small Business Administration, customers are eager for their loans to be forgiven. Once the process is finalized, local banking industry leaders expect a seamless process.
121 Financial Credit Union CEO David Marovich said they started accepting forgiveness application on Aug. 14. While he anticipates there will be some updates to the guidance from the SBA, he hopes it won’t be too significant, with the federal agency having had enough time to work through the program to avoid the hiccups that plagued the first few weeks.
“I would think we’re hoping that while they might have some changes, that those would be pretty well completed early on,” Marovich said.
At IberiaBank, Market President Abel Harding said they believe they haven’t received enough guidance from the SBA to begin processing loans, although they expect changes as well.
“We’ve anticipated – and seen – tweaks in guidelines throughout the process. It’s quite probable that the forgiveness process will be no different,” he said
Harding added that they expect the process to be much more efficient than the application process.
One of the main remaining questions is whether companies with a loan of less than $150,000 will be forgiven automatically. That would be a big relief for 121, Marovich said as it would immediately forgive almost 90% of the loans that they have handled. It will be much more difficult to process forgiveness if those loans under the threshold are not forgiven immediately. However, Marovich said they would still be able to handle it.
“But I think it will be much more difficult if they don’t do that, and then announce another round of funding, then it can be quite taxing on us and it will be difficult, then for people to get their funding as well,” said Marovich.
As of early March, 121 had processed 497 PPP loans, 450 of which would fall under the $150,000 threshold. While they don’t have an automated process for forgiveness, he doesn’t believe the process will be as trying as it was in the beginning of the program.
“The more you do, the better, the smoother it goes,” Marovich said.
Some clients are still feeling anxious as things continue to get flushed out, Harding said, but remain cautiously optimistic as things begin to normalize and it becomes clearer how to navigate in this environment.
“The unknown is always cause for concern, both for businesses and individuals,” said Harding. “The pandemic has not impacted all sectors equally and there are certainly some that have suffered considerably, and they remain worried about the future.”
Marovich said that he expects some anxieties to continue until the guidance becomes official and the loans are forgiven.
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