Banks treading lightly with Payroll Protection Program - FOX34 Lubbock

Banks treading lightly with Payroll Protection Program

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LUBBOCK, Texas -

Close to 350 billion of the multi-trillion dollar stimulus package went towards the Small Business Administration, an incentivized loan designed for small businesses to keep their workers on payroll.

Leaders at all levels have been pushing businesses to those loans since they were announced. 

It's called the Payroll Protection Program. Any business with less than 500 employees is eligible, according to the Small Business Administration. If the business keeps the same number of employees between now and June 30, the loans are completely forgiven.

Even with federal backing, James Arnold with ABC bank said the program has made lenders close ranks very early. 

"We're only doing these for existing customers," Arnold said. "We don't have the capacity from the manpower perspective to process all of our customers and everybody else." 

The banks are being cautious. If they take on too many and make a mistake, it could cost them big. 

 "We want to make sure we get it right and when it comes time for that loan to become forgivable, the SBA does provide forgiveness for that loan," Armold said.

Arnold said any time the SBA does anything different, there are issues.

"They're good at what they do as long as it's inside their box and this is completely outside of it. They're doing the best they can to provide answers to community banks and bankers," Arnold said. 

The protection plan may end up seeing more money. 

"There's talk of an additional package coming through of about 200 billion dollars  and the Secretary of Treasury has been quoted saying they will not run out of money," Arnold said. 

There have been about 350,000 applications nationwide, with 50 billion already committed. 

 

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