Hudson Valley Credit Union, Poughkeepsie, N.Y., knows small businesses need support to survive coronavirus-related shutdowns. So the $5.5 billion-asset credit union embraced the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) while the agency was still developing guidance, says Brian Waldron, senior vice president of lending.
Hudson Valley members submitted more than 250 PPP loan applications when the SBA portal opened April 3 in hopes of gaining approval before funding ran out, even though some SBA details weren’t available for another five to seven days. That meant Hudson Valley worked through early applicants’ funding documents while helping another 300 businesses apply.
“This SBA program would typically take two years to roll out smoothly,” Waldron says. “Putting it together so quickly has been challenging for all institutions.”
PPP loans offer up to the lesser of either $10 million or 2.5 times a business’ average monthly payroll. Loan forgiveness is guaranteed if the business pays employees for eight weeks and uses 75% of funds for payroll expenses, including health benefits.
Borrowers can use remaining funds for rent, mortgage interest, or utilities. Interest rates are set at 1%, but there is an 18-month amortization for payments on the two-year loans if loan forgiveness criteria is not satisfied.
Helping business owners understand these rules is essential, Waldron says. Although Hudson Valley reviews 1099s and other documents, ultimately “it really is the borrower who is attesting to their application and loan payroll numbers, as well as their use of funds.”
‘We want to help small businesses keep their people employed.’
Many businesses have laid off employees, so fulfilling PPP rules requires calling them back to work even if there is no work for them to do.
“The businesses are scared of the unknown, but they want to keep people employed,” Waldron says. “It’s hard for us when they ask questions like, ‘How does the forgiveness process work?’ and we have to say, ‘We are still awaiting guidance from SBA.’”
Hudson Valley trained consumer lending employees to assist the business team. These employees adjusted to working remotely while coping with SBA website outages due to high volume.
Managing stress by pausing at regular intervals to take a deep breath has been critical, Waldron says. “You just have to roll with it. We have a team dedicated to looking at the SBA website regularly and attending daily webinars seeking guidance and answers.
“It appears to be a simplified product,” he adds. “We are trying to balance taking all the right risks and precautions without overthinking it.”
PPP’s original $349 billion ran out April 16, but President Trump signed a bill adding $310 billion to the program.
Waldron hopes this will allow Hudson Valley to expand the program to nonmembers.
“This is an obligation to our community,” he says. “We want to help small businesses keep their people employed.”