United Southern Bank Funds Payroll Protection Program Loans
United Southern Bank began to fund its approved Payroll Protection Program (PPP) loans on Friday, April 10, 2020. The bank deposited approximately $7 million of PPP funds into their small business customers’ checking accounts paving the way for employers to keep their employees paid.
USB has millions more dollars that will be funded during closings already scheduled for April 13-15, 2020, part of the $25 million worth of loans that its lenders have loaded into the Small Business Administration (SBA) site.
Part of the CARES Act, PPP is a loan program that is designed to help America’s small businesses keep employees on their payroll. Loans will be forgiven if the funds are spent according to the PPP rules.
As a community bank that has always been involved in small business lending, United Southern Bank began the process of getting their lenders approved for the program as soon as it was open for banks to do so as the loans are being administered through the SBA.
The approval by Congress in late March allocated up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis and encouraged small businesses to begin the application process.
As with the State of Florida’s unemployment application process, the process of getting all the pieces in place to apply, approve and fund the PPP loans was a bit dis-jointed in the beginning, but it evolved very quickly.
Greg Nelson, President and CEO of United Southern Bank described it this way, “The government approves $2 trillion dollars to fly to Mars and encourages everyone to sign up right away for the scenic flight. Then the government decides it is time to start building the spaceship. We certainly understand that situation and do not fault anyone, but it did pose a lot of challenges initially. Our lending team reacted immediately and heroically to get USB approved as a lender, and then individual lenders approved with the SBA.”
As lenders began the process of taking applications, their questions and requests for more clarification and guidance has been pushed up to the SBA through calls to US Congressmen/women that were facilitated by the Florida Bankers’ Association.
United Southern Bank had received about 450 applications from its existing business customer base that includes a wide variety of types of small businesses and community non-profit organizations. Greg Nelson states that the lending areas at USB look like mini war-rooms as employees work at a frantic pace to process and fund the loans.
The next step in the process is to produce the promissory notes for each loan and have a loan closing where small businesses can receive their much-needed loan funds. In order to comply with social distancing rules and to protect its lenders, closings will be held outside with instructions and guidance being given via cell phone conversations or through walk-up drive-thru lanes.
The loans can be used for payroll costs, including benefits, interest on mortgage obligations that were in place before February 15, 2020, rent, under lease agreements in force before February 15, 2020 and utilities for which service began before February 15, 2020.
According to the SBA guidance, the loan amounts will be forgiven as long as:
• The loan proceeds are used to cover payroll costs (at least 75%), and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
• Employee and compensation levels are maintained.
For more information go to Treasury.gov or call your banker.