How small businesses benefit from partnering with local banks

Over this past year, during the COVID crisis, many bank lobbies have been shuttered, making neighborhood banking seem like a thing of the past. But for small business owners, this crisis has brought home just how important it can be to have a strong partnership with a local bank.

Marilee Falco

Thinking back to the beginning of the pandemic when communities were in lockdown, many small businesses needed to apply for Paycheck Protection Program (PPP) loans to cover payroll. Because of the complexity of the PPP loan applications, most banks worked with their existing business clients first. Early on, it was often those businesses with established relationships with local banks that received their emergency funds first.

Even in “normal times,” having a long-term working relationship with a local bank can be beneficial to a small business. Local banks have the same security and compliance requirements as larger mega-banks, but one particular benefit of smaller local or regional banks is that they have more latitude than larger banks when it comes to waiving fees or granting a more desirable interest rate.

Cynthia Joyce

If a small business owner needs something outside of the ordinary, she may not have to jump through as many hoops with a local bank. If, for example, the company needs something like a medallion signature, banks may only be willing to work with established clients they know well.

With a local bank, you are likely to receive more personalized service than you would receive with a national bank. We have noticed that there is often less turnover and employee rotation between the branches of local banks as opposed to national ones. If a business owner has a banking question, when she calls her local bank, she will speak to a person in her area and not a call center as may happen with national banks. And if there is unusual activity in a business account, a local banker will often pick up the phone and call a business owner rather than wait for the automated system to kick in.

Over time, small business owners may realize another unintended and unexpected benefit of working with a local bank. Your local banker may become a good source for business development. Because they build business for their bank through networking, and because they come to know your business well, they may very well become a good referral source for your company.

A final benefit of working with a local bank? By doing so, you are supporting your local community’s economy – and not that of a national bank with headquarters elsewhere.

Yes, there are certain advantages to working with larger, national banks. Among them, bigger banks often have more comprehensive online services, for example, which can simplify and expedite transactions for businesses.

If your small business is in the market for a local bank, the Independent Community Bank Association (ICBA) can help you compare options in your area. In addition, the FDIC’s BankFind tool provides information about all FDIC-insured banks and their locations, including current and historical data.

Of course, every business wants their banker to collaborate well with other professional advisers, such as attorneys, accountants, and strategists. It may be advisable to contact other small business owners to inquire about their experience working with local banks.

Whether you choose to bank with a local, regional or national bank, it’s always a good idea to take the time to develop and maintain a close relationship with your business’s banker.

Marilee Falco, CFP®, ChFC, is a principal and financial strategist at Agili, responsible for client financial strategy and counsel, comprehensive financial planning and investment management as well as managing the firm’s Bethlehem office. A Certified Financial PlannerTM and chartered financial consultant, she can be reached at [email protected]Cynthia Joyce, MBA, CPA is the Chief Operating Officer at Agili, of Bethlehem and Richmond, Va., responsible for overseeing financial, budgeting, human resources, and office operations for the firm. She can be reached at [email protected].

Harrisburg restaurateur faces fines, jail for pandemic-related fraud charges

A Dauphin County restaurant owner faces $2.6 million in fines and up to 90 years in prison after allegedly defrauding the federal government out of $237,500 in loans from the Small Business Administration.

Scott Levy, owner of the Hershey Road Family Restaurant in Harrisburg, applied for $227,500 in loans through the SBA Economic Injury Disaster Loan (EIDL) program and Paycheck Protection Program (PPP) before spending a majority of the money on personal expenses and transferring $125,000 to his mother in Florida, according to federal prosecutors.

Levy, 58, was charged with bank fraud, wire fraud and money laundering, the U.S. Attorney’s Office announced on Tuesday.

According to allegations filed by the U.S. Attorney’s Office for the Middle District of Pennsylvania, Levy was approved for $159,900 in EIDL proceeds in June 2020 and a $77,600 PPP loan in May 2020 on behalf of his Harrisburg restaurant.

The court alleges that Levy did not use the funds for their intended purpose when he gave half the funds to his mother to place in safe deposit boxes and spent the rest on personal expenditures.

His business, Hershey Road Family Restaurant, closed last July.

The case is to be consolidated with another tax fraud case that Levy plead guilty to last November.

Levy admitted late last year to tax fraud and related offenses after he failed to pay more than $230,000 in federal income and payroll taxes from Jan. 1, 2014 to Dec. 31, 2018.

Levy’s attorney, Joshua Lock of Harrisburg-based Law Offices of Joshua D. Lock, said that the firm will not be commenting on the case at this time.

PPP’s extension gave borrowers needed time to apply, funds expected to dry up before end date

An extension to the Paycheck Protection Program (PPP) from March to May allowed more time for small firms and businesses looking to draw from the program for a second time to benefit from it. But without additional funds, the program is expected to dry up soon.

The newest wave of PPP loans began early this year and was signed into law by President Trump in December.

The third round of the program allowed businesses to apply for a second PPP loan if they had 300 or fewer employees, demonstrated a drop in revenue for one calendar quarter compared to the previous year, and showed they used all of their first-round money.

Late last February, the Biden administration revised PPP small business loans to reach smaller, minority-owned firms. However, the federal business loan program was scheduled to end just a month after businesses had a chance to cash in on the significant increase in funds they would receive.

It also gave businesses who were unable to apply for the first round of loans a chance to do so, but because of an eight-week hold on applying for a second round, many of those businesses would have been unable to apply for their second round by the March end date.

Biden signed the PPP Extension Act of 2021 in late March, allowing borrowers to continue to apply for PPP loans until May 31. At the time the act was signed, the Small Business Administration (SBA) had already approved nearly $196 billion out of the $290 billion in funds set aside for the program.

Between businesses applying for their second loan at a max of $2 million and small businesses now borrowing against their gross income rather than their net profit thanks to the new PPP rules approved by the Biden administration, the program is expected to be out of money weeks before the new deadline.

“For the last month and a half the burn rate has been $10 billion a week,” said David Patti, director of communications and marketing at Chester County-based Customers Bank. “The guy who could qualify for $1,000 now qualified for $10,000. That unleashed pent-up demand and there are now a lot more people in line.”

As of April 26, the SBA reported having $18.5 billion left in its PPP loan pool, according to Patti.

Despite the swiftly dwindling funds, the extension has proven to be beneficial for borrowers newly eligible for the program, said Jeramy Culler, vice president and business banking manager at F&M Trust in Chambersburg.

“The changes were made late in this round of the program, and the additional time allows borrowers who were previously ineligible to compile their information and submit applications,” said Culler. “It also provides additional time for those borrowers who didn’t receive a first-draw loan until 2021 to meet the use of funds criteria for a second-round loan. I expect there to be continued interest from borrowers until the money is exhausted or May 31, whichever comes first.”

Banks also had more time and resources to manage the loan applications coming in from borrowers since the first wave of PPP was already behind them.

Last year, lenders had two weeks to prepare for the bevy of borrowers that would knock on their doors. This year, banks were able to take advantage of their experience from 2020, said Matthew Long, chief operating officer of Ephrata National Bank.

“That was in the height of COVID. We weren’t sure what to do from an employment perspective,” he said. “We did a very manual labor-intensive process to do it quickly. As we looked at this further and moved into the second wave, we took advantage of tech because we had more time on our side to reevaluate.”

Recently the SBA launched a new round of Economic Injury Disaster Loan assistance to provide $5 billion in additional assistance to small businesses and nonprofit organizations impacted by the pandemic.

This and other programs such as the $28.6 billion Restaurant Revitalization Fund are part of more targeted aid for businesses compared to the broader PPP, which could help lift up businesses hit hardest by the past year, said Patti.

“The Biden administration thinks it’s time to focus on hotels, restaurants and others and that’s all fair to now say ‘Let’s get help to the people who have lingering problems or problems unique to their sector and be much more tailored to their policy,’” he said.

Op-Ed: How community banks are empowering small business

COVID-19 has certainly exposed some opportunities for small business, irrespective of the industry in which you are employed. Whether we are discussing another round of PPP (Paycheck Protection Program) or the EIDL loans, which carry with them remarkably favorable rates and terms, the reality is that never in our recent history have we relied so heavily on the relationship offered by our banking partners. 

It is important to note that no two banks are the same. Be it a community bank regulated differently than, say, a Federal Credit Union, there are nuances that differentiate. And, considering the pandemic those nuances have been exploited and, to a certain degree, exposed. Some for the good, and some for the not-so-good. 

This piece is not about how our banking partners have provided our firm, and many like it, with the capital infusion to weather this storm of uncertainty. That is their job. Some do it better than others, but that is to be expected. Rather, this is about how specific banks have gone to the nth degree and exceeded our most flighty of expectations. One continues to move with us in concert to ensure that we are well-capitalized, poised for growth, receiving what we need from the PPP, and propping us up for a balanced financial infrastructure. 

I receive calls from different banks and lenders vying for my business. And, to some extent I appreciate their persistence and their pitch. Afterall, we are all working to achieve the same means, growth. However, I have learned, especially during this pandemic, that one specific bank (who absolutely knows who they are) knows no bounds when it comes to ensuring that their customers are making the right decisions… even if that means turning down a deal because another offer is better for my business. There’s humility in those actions. And that counts for something a little extra. 

In my role, it is my fiduciary responsibility to ensure solvency and optimized growth strategies. Every dollar we deploy to grow our business needs to have an ROI that is greater than the cash outlay. That takes wisdom and acumen. But it could not be done as well without the guidance of these types of partners. 

One partner has been ahead of the curve for the better part of the year. They are constantly up on the information flow and are quick to disseminate what they know to their clients. What is more is that they do it without being asked. It is not about the margin. Well, it is not all about the margin. The reality is that you cannot exist without a profit. But, for this specific organization, it is about the brand and how that brand touches the community and partners with us to ensure we are reaching as many as we can. 

Yes, part of the intent of this Op-Ed was to point out that there are differences in banking relationships that vacillate between transactional and relational. Our partner is most certainly the latter. The more meaningful part for me, however, is the simple way they engage us. It is not a duty. It is not a chore. It is a privilege. 

My advice for all small businesses is to truly evaluate the relationship with your financial institution. The dividends will push into perpetuity when fostered well. 

Brandon Rogers is chief financial officer for Verber Dental Group, in Camp Hill, Pa. His past experiences include roles at Giant, Highmark, and JPMorgan. 

PPP loan applications open today with a tighter focus on small business

Lenders with less than $1 billion in assets can now submit applications for the second round of the Paycheck Protection Program (PPP) starting today, but borrowers looking to use the program a second time will have more hoops to jump through than they did last year.

The newest rollout of the program by the U.S. Small Business Administration is nearly identical for first time PPP borrowers, but businesses looking to draw from the program a second time, will face a number of changes to ensure funds go to more small businesses.

The program, which gives eligible businesses a low-interest private loan to go to payroll and other costs, is funded through the $284 billion, bipartisan coronavirus relief bill signed into law last month.

During the first round of PPP loans, borrowers were given 2.5 times their average payroll costs with a max loan amount of $10 million. Anyone who has yet to apply for a loan through the program will still be eligible for that amount, but businesses drawing for a second time be limited to $2 million.

Borrowers in the restaurant and hospitality industries drawing from the program a second time have the opportunity to draw more from the program at 3.5 times their monthly payroll.

Businesses seeking a second PPP loan must have 300 or fewer employees, demonstrate a drop in revenue from one calendar quarter compared to the same quarter the previous year, and show they used all of their first-round money.

Ryan Hurst, a partner at CPA accounting and business consulting firm RKL, said that the majority of questions he is fielding concern the the added steps for second-time borrowers. The new round is designed to have a stronger emphasis on smaller businesses.

“Previously there was no real quantitative test to this,” he said. “This time, they say if you want a second loan, there needs to be a quantitative test because you can show performance and see if it declined or not. The attempt is to get more money into the hands of those that need it.”

While there may be more hurdles for borrowers seeking a loan, the administration has also made a number of changes this time around to give borrowers more freedom on how they spend the money. Previously PPP could only be used for payroll, rent, mortgage and utilities. The new law includes operations expenditures, supplier costs, worker protection expenditures and property damage costs.

Borrowers drawing for either their first or second time will qualify for full loan forgiveness if, during an eight-to-24-week period, employee and compensation levels are maintained, the proceeds are spent on eligible expenses and at least 60% of those proceeds are spent on payroll costs.

For businesses borrowing under $150,000, Hurst said it should be a relatively easy process to receive loan forgiveness.

“For a forgiveness application coming for loans under $150,000, that is supposed to be a simple one-page application for those borrowers,” he said. “If someone has a loan of $140,000, they can certify a number of things and say we used all the money and followed the rules and they can go on their way a lot more easily than someone with a larger loan.”

Harrisburg-based Centric Bank opened its loan portal for businesses to get a head start on their PPP loan applications earlier this week. Patricia Husic, president and CEO of Centric Bank, said that the bank has a much more automated loan portal this year, which should take the heavy lifting away from small businesses and make the processing of those loans much quicker.

“For some last year I heard it took them six to eight weeks to get their funds,” Husic said. “How do we turn it quickly and get it into their hands? Those are the key areas where I feel like we are in a better position.”

The SBA plans to reopen the PPP program to lenders of all sizes on Tuesday.

COVID-19 relief bill clarifies PPP loans

Congress clarified some of the confusion regarding Paycheck Protection Plan loans with the $900 billion COVID-19 economic relief package agreed to on Sunday.

The new legislation contradicts the IRS’ earlier interpretation that businesses would not be allowed to deduct for expenses paid with forgiven PPP dollars. The measure also provides millions more in relief funding for small businesses, including performance venues.

The PPP loans were originally understood to be eligible for tax-free forgiveness if at least 60% of the money was spent on payroll. But a few months into the process, the IRS announced that expenses paid with the other 40% of the loan could not be deducted on 2020 tax returns, asserting that recipients would be receiving a double benefit by deducting expenses paid for by the government.

“Even for larger businesses that are really struggling, that could make life really tough,” said Joshua Mullins, CPA and partner with Edmond-based Arledge & Associates during Friday’s JR Now webinar. “If I’m a business and I got a PPP loan and now those deductions aren’t taxable anymore, well then you just created a taxable income for me that I wasn’t expecting.”

Lawmakers responded to requests from businesses nationwide that the issue be rectified in the next round of relief funding and expanded the list of expenses eligible for deduction that can be paid with forgiven PPP loans.

The bill includes $284 billion in forgivable loans for businesses and expands eligibility to nonprofits, local newspapers, television and radio broadcast companies. A portion of the funds are to be set aside for very small businesses, minority-owned and women-owned businesses, which did not receive as much as some larger businesses during the original round of relief funding.

Small businesses with up to 300 employees that can show a 30% revenue loss in any quarter of 2020 may be eligible for a second round of PPP funding. Another $20 billion in Economic Injury Disaster Loans is set aside for businesses in low-income areas.

Unlike previous relief packages, Sunday’s agreement includes $15 billion for live performance venues, independent movie theaters and cultural institutions.

“We’re thrilled that Congress has heard the call of shuttered independent venues across the country and provided us a crucial lifeline by including the Save Our Stages Act in the COVID-19 Relief Bill,” Dayna Frank, board president of the National Independent Venue Association, said in a statement issued by the NIVA.

Though the relief is welcome, the PPP loans may make filing taxes in the upcoming year a challenge. Businesses that still have a PPP loan on the books may have to get permission from the bank or even escrow the entire amount of the loan before selling the business, Mullins said, suggesting that business owners consult with their accountant to determine the best course of action.

New federal stimulus package welcomed, lawmakers point out issues

State lawmakers praised the coming of the $900 billion federal stimulus package approved by the Senate and Congress this week but noted that much more must be done before the nation recovers from its public health and economic crisis.

The fourth major spending legislation targeting Americans in the midst of the COVID-19 pandemic is awaiting President Trump’s signature after being approved by both the House and Senate on early Monday morning.

The legislation, which includes a new round of $600 stimulus checks, a $300 extension to unemployment benefits and a second round of access to the Paycheck Protection Program (PPP), was long overdue, Gov. Tom Wolf said in a statement on Tuesday.

“The emergency relief funds authorized under the CARES Act were crucial to helping our nation survive the spring surge of COVID-19, but those funds expired while desperate need remained,” said Wolf. “Americans continue to struggle due to the economic consequences of this global pandemic.”

The second round of forgivable PPP loans will provide 2.5 times the monthly payroll costs for businesses from a $284 billion federal pool. Businesses will also be able to deduct expenses paid with PPP loans.

Tom Bené, president & CEO of the Harrisburg-based National Restaurant Association, said that Congress’ action will keep tens of thousands of restaurants from closing for good.
“A second round of PPP, combined with unique enhancements for the restaurant sector, will provide critical access to capital,” said Bené. Restaurant operators and their employees are dedicated to serving their communities, and today’s bipartisan agreement will give them the opportunity to do that through the holidays.”

Both U.S Senators Bob Casey (D-PA) and Pat Toomey (R-PA) issued statements noting that they were relieved to see additional aid released to Pennsylvania, but saw flaws in the legislation.

“While there is much in this bill that I disagree with, including wasteful government spending and misguided policies that will dampen the recovery, the good it does outweighs the bad,” said Toomey.

He added that he was glad to see Congress extend unemployment eligibility for the self-employed and gig workers, reauthorize PPP for small businesses, pick up the cost of distribution and administration of the COVID-19 vaccine and provide assistance for education.

Casey wrote in a statement that the relief bill does not include critically-needed money for state and local governments to prevent service cuts and layoffs for firefighters, law enforcement and local health departments.

“It also lacks meaningful policies and investments to protect nursing home residents and workers and to allow seniors and people with disabilities to receive needed care at home,” he said.

Federal officials evaluating ‘good faith’ of high-value PPP loan borrowers with new form

Borrowers of the federal Paycheck Protection Program who took loans of $2 million or greater can expect to receive a form from lenders on which they will be required to attest their funds were necessary to sustain the operations of their business during the pandemic, according to an update from the Small Business Administration in early November.

Launched in early April and concluded in August, the Paycheck Protection Program (PPP), established under the CARES Act, provided loans for businesses to retain employees and pay for certain overhead costs. In its current form, the program allows borrowers to be fully forgiven if they use at least 60% of the loan on payroll expenses.

The PPP has provided 5.2 million loans worth a total of $525 billion to businesses and sustained more than 51 million U.S. jobs, according to a statement released by Treasury Secretary Steven Mnuchin in October.

SBA loan reviewers will use questionnaires — distributed to lenders to be given to borrowers in the coming days — to collect “supplemental information” to evaluate the good-faith certification that borrowers made on their PPP Borrower Application, according to the forms, which have been reviewed by Lehigh Valley Business.

Information solicited by the forms includes the borrower’s gross revenue in the second quarter of 2020 compared to previous quarters and details of how borrowers altered their operations since President Trump’s March 13 disaster declaration.

The SBA is requiring separate questionnaires of for-profit and nonprofit employers — Form 3509 versus Form 3510 — with the questionnaire for nonprofits requesting information related to endowment income and specific nonprofit entities like education and health facilities. The forms state that they must be completed and returned to the lender servicing the PPP loan within 10 days of receiving it from the lender.

The reason SBA reviewers will give special scrutiny to loans of $2 million or greater is to “maximize program integrity and protect taxpayer resources,” according to the forms.

“The information collected will be used to inform SBA’s review of your good-faith certification that economic uncertainty made your loan request necessary to support your ongoing operations,” the forms state. “Receipt of this form does not mean that SBA is challenging that certification. After this form is submitted, SBA may request additional information, if necessary, to complete the review. SBA’s determination will be based on the totality of your circumstances.”

Failure to complete the questionnaire could result in the SBA’s determination that the borrower was ineligible for either the PPP loan or any forgiveness amount claimed, forms state.

Carbon County has $5.8M in PPP grants for small business, nonprofit and others that ‘fell through the cracks’

About $5.79 million in Covid-19 Relief (Carbon) County Block Grant money up for grabs in Carbon County.

Distributed through the Pennsylvania Department of Economic and Community Development grants are open to small businesses, certain nonprofits and municipal organizations, many of whom “fell through the cracks” of previous federal CARES Act stimulus finding.

Pennsylvania received $625 million to make available to its 62 counties through the CARES Act.

“The funding is to help small businesses pay for pandemic related costs” to prepare, prevent and respond to coronavirus, said Kathy Henderson, director of economic development at Carbon Chamber and Economic Development Corporation in Lehighton.

The focus of the county grants is to help shore up funding for those who missed out on Paycheck Protection Program or Economic Injury Disaster Loan program benefits, Henderson said.

Grant applications are open until July 31. Funding is not expected to release until late September, and the size of grants has not been determined, officials said.

Carbon County Commissioner Chris Lukasevitch said grant amounts would be determined upon demand, determined through vetting applications received through the process.

“Based upon the amounts [received and requested], we’ll be able to do 100 percent or some proportion,” he said.

Applications will be vetted through committees based upon companies with less than 100 employees and must meet criteria for assistance.

Those eligible to apply include municipal governments, nonprofit assistance programs, behavioral health services and broadband service improvements or implementation in underserved areas of the county.

Henderson said the grants aim to offset costs needed to reopen or make accommodations to continue doing business during the pandemic such as paying for PPE, installing or adding safety and protective barriers, additional disinfection supplies or professional cleaning services.

“The grants [may also] pay for pandemic related costs such as tents [or canopies] for moving business outdoors,” Henderson said.

Michelle Keil opened her new business, Uncommon Grounds at the Mill in Weissport in February. Six weeks later, she was forced to shut her new business down.

After quitting her full time job to open the brick and mortar Uncommon Grounds at the Mill “knowing it takes a while to get up to full speed, we closed the doors on March 19, and those [mobile café] events got cancelled, too,” She said.

“We already had an entire year booked for the trailer. One after one the events for the trailer got cancelled,” she said.

Keil said because the Uncommon Grounds Mobile Café had been operating on a part-time weekend basis and was serving and events as coffee house on wheels, she hit roadblocks for PPP and EIDL funding after coronavirus shut businesses down.

Though she was unsuccessful in obtaining money through the Paycheck Protection Program – her business would only qualify for one week of employee salary benefit, she received a small EIDL grant as well as a $1,000 grant from Carbon County.

“We’re a unique situation because we’re new, but we’re not new. We expected to get PPP to pay ourselves, some employees and keep operating, but that didn’t happen,” Keil said.
She hopes this round of county grant money will be different.

“The Carbon County grant, if we get it, will allow us to bring on more staff to support creative opportunities we’re exploring,” Keil said.

Keil is not open full time yet, and she has set up at the Lehighton downtown outdoor farmers market, and is exploring others.
According to the Pennsylvania Department of Economic and Community Development website, the Community Development Block Grant conditions have been revised to provide relief through the CARES Act to organizations impacted by coronavirus through financial grants and technical assistance.

The provision allows business and municipalities to apply to offset money they spend to “prevent, prepare for and respond to the coronavirus,” the Pennsylvania state website said.

Carbon County Commissioner Chris Lukasevitch said 501 C 3 and 501-(19) organizations such as U.S. Armed Forces posts or auxiliary organizations, would be eligible to apply for grants through the county’s offering.

“We will prioritize those who did not receive PPP or EIDL loans,” Lukasevitch said.
He expects demand will be a factor in driving grant award amounts. “We don’t have any numbers yet” for individual grants, Lukasevitch said.

The Pennsylvania website said expenses must be dated from March 1 through December 30, 2020 to be eligible.

Signed into law March 27, 2020 the CARES Act was an historic economic package worth more than $2 trillion.

The small business grants open to business owners like Keil, will help offset expenditures to reopen and recoup some of the money they’ve spent “just to survive this.”

Keil is grateful to Carbon County officials and agencies for supporting her fledgling business during the pandemic.

“A whole team of people by my side, sending me grant applications and different funding sources. “There have been a ton of silver linings, which is what has kept us going,” she said.

Fulton Bank handles $900 million in PPP loans

Approximately 4,000 Fulton Financial Corporation customers across Pennsylvania received more than $900 million in funding through federal CARES Act Paycheck Protection Program, including hard-hit nonprofit organizations whose mission is to serve others.

“When we got the PPP it allowed us to hire the entire staff back [and restore] critical programs serving the community,” said David Fagerstrom, president and CEO of the Greater Valley YMCA in Allentown.

Throughout its service area more than 10,000 loans worth nearly $2 billion have been facilitated by Fulton, officials said.

The CARES Act, or Coronavirus Aid, Relief and Economic Security Act, signed into law on March 27, aimed to offset financial hardship due to business and organization closures and the resulting income loss due to the pandemic.

Greater Valley YMCA provides meals to children of who receive National School Lunch Program free and reduced lunch services.

“Some schools were serving lunches, but no one was serving suppers,” Fagerstrom said.

It offers virtual educational programs for children and it operates essential worker day-care services. The “Here for You” child care program for health care and emergency responders was offered through the Y operating with a special exception waiver during the coronavirus peak. Before the mandatory governor’s shutdown order, Greater Valley employed about 493 people.

Before receiving PPP funding, employment numbers sank below 50 during drastic measures taken to ensure the Y would not close for good.

“With all the Y’s closing – child care and membership services – [these] combined are about 80 percent of our business,” Fagerstrom said. “When the physical plants closed our income went down to almost zero.”

Once PPP funding was received Greater Valley YMCA rehired its entire staff, brought back needed services, provided meals and increased virtual education offerings to children.

“You always hope your business relationships are less clinical and more personal – it certainly felt more personal with this,” he said.

An established long-time relationship with Fulton, along with the bank’s expertise in working with nonprofit organizations created a quick, seamless application process from lender to Greater Valley YMCA, Fagerstrom said.

Not long after filing its PPP application Fagerstrom received a phone call from Fulton with news that the Y had received funding.

“In our wildest dreams I would not expect our guy at our bank [to] call us at 5:40 p.m. on a Friday. That call was a little thing, but it made a big difference to the Y. It was a relief for [our] people,” Fagerstrom said.

Building from the ground up

PPP allowed Greater Valley to expand virtual educational programs to offset the shortened academic school year, especially critical for youngsters who need extra support ahead of entering kindergarten in the fall.

“When all the staff came back one of the things we quickly did …was Webex classes with the 2, 3 and 4-year-olds to keep them learning, reading and on track with their ABCs,” he said.

Joseph Feilmeier, market president for Fulton Bank’s City Line Plaza in Bethlehem, said the response of Fulton’s team to the CARES Act helped area nonprofits continue to operate and minimize the long-term impact on the region’s economy.

“Our mission [was] to build a process from the ground up in a very short period of time to serve our clients. It was really all hands on deck,” he said.

More than 600 Fulton employees took on new assignments doing work that was outside their normal responsibilities to help “stand up a program where there wasn’t one,” Feilmeier said.

“For the not-for-profit piece, we encouraged our employees to reach out and find the underserved organizations we could help and support, Feilmeier said.

Boosting nonprofits

Jared Mast, executive director of Greater Easton Development Partnership said Fulton worked “around the clock” with other community lending organizations to help area nonprofits and businesses financially weather the pandemic. A Fulton staff member contacted him on a Saturday to confirm information on the PPP application to keep it moving.

“Without [the PPP] it would have limited our ability to keep on staff. Essentially they were staying as close to the front lines of this as possible,” Mast said.

GEDP oversees the Easton Farmers Market, the Easton Public Market, PA Bacon Fest and other fundraising programs as well as Easton Main Street Initiative and Easton Ambassadors.

“When this started to change the way business could be transacted [we arranged for] curbside pickup for folks who wanted to shop at the [Easton Public] Market,” Mast explained.

GEDP collaborates with businesses and other nonprofits to nurture Easton’s economic vitality, including Easton’s West Ward neighborhood.

A forgivable PPP loan allows GEDP to continue its work in the community.

Match making

He said GEDP has distributed about $5,000 in gift cards that could lead to roughly $20,000 in revenue to personal care salons, among the most economically hard hit businesses in Pennsylvania.

PPP has allowed GEDP to create a “match making” technical assistance program to help businesses move to ecommerce platforms and develop digital marketing plans as a result of Covid-19.

“Relationships that provide different kinds of value, not just lower interest rates or checking account fees,” are important, Mast said.

On a side note, Fulton is part of a $50,000 commitment over six years, along with People Security Bank, PNC and Highmark Life insurance, to build other funders that focus on youth, resident and small business neighborhood improvement initiatives.

“It’s a longer term community commitment we appreciate [having] with Fulton,” Mast said.

SBA launches ‘less intimidating’ PPP application, re-opens EIDL

Following the enactment of legislation that loosened requirements for borrowers to be forgiven for a Paycheck Protection Program loan, federal administrators this week launched a streamlined application form they say will make it easier for some borrowers to fully realize the forgiveness of their PPP loan.

The alternative form cuts down on the volume of calculations and documentation required to apply for a loan from the Paycheck Protection Program (PPP). Borrowers are eligible to apply with this form if they fall into one of the following categories:

  • They are a self-employed individual or their company has no employees.
  • They did not reduce salaries or wages of employees by more than 25% as a result of the COVID-19 pandemic and didn’t reduce employee count or hours they worked.
  • They experienced a reduction in business as a result of health directives related to the pandemic and did not reduce salaries or wages of employees by more than 25%.

This new form is in addition to the agency’s revision of the full forgiveness form to fit the provisions of the recently passed “PPP Flexibility Act.”

“This is great news for small businesses,” said SBA Regional Administrator Steve Bulger, who oversees agency operations in the mid-Atlantic region. “The EZ application requires fewer calculations and less documentation, which makes the process much less intimidating. I’m sure this will go a long way toward improving access and helping us distribute the remaining PPP appropriations to support small business owners and their employees.”

The deadline to apply to receive PPP money is June 30. The latest report from the SBA says there’s still $129 billion left in the second round of the PPP.

This week SBA officials also reopened the Economic Injury Disaster Loan (EIDL) program portal on the SBA website, offering long-term, low-interest assistance for small businesses or nonprofits impacted by the pandemic. Businesses can also apply for an EIDL loan advance of up to $10,000 in emergency relief, which doesn’t have to be repaid.

Employers can use EIDL funds to fill gaps in payment obligations that aren’t already covered by a PPP loan. EIDL loans have long repayment terms, up to 30 years, with no payment due from the borrower for one year after disbursement.

“With the reopening of the EIDL assistance and EIDL Advance application portal to all new applicants, additional small businesses and non-profits will be able to receive these long-term, low interest loans and emergency grants – reducing the economic impacts for their businesses, employees and communities they support,” said SBA Administrator Jovita Carranza.

Landmark changes to PPP headed for Trump’s desk this week

In what trade groups are calling a sign of hope for small and mid-sized businesses, Congress passed a bill this week making significant revisions to the Paycheck Protection Program, which President Trump is expected to sign this week.

The changes arrive as many employers near the end of their eight-week coverage period during which they are required use their disbursements to bring back their full-time employee counts to pre-pandemic levels to qualify for SBA forgiveness. The new bill would triple that covered period to 24 weeks.

“As the majority of small businesses reach the conclusion of their Paycheck Protection Program forgiveness period in the next couple weeks, they are figuring out how to comply with the loan terms while also navigating reopening and rehiring their employees in a safe manner,” said National Federation of Independent Business (NFIB) Government Relations Vice President Kevin Kuhlman said in a statement issued Wednesday.

“The Paycheck Protection Program Flexibility Act of 2020 will further help many small businesses impacted by COVID-19 by reducing the payroll limitation of the program and extending the loan forgiveness period,” Kuhlman said. A June 2 NFIB study conducted at the end of May found that 23% of responding employers’ coverage period ends between June 8 and June 14, while 36% said their coverage period ends in the second half of June.

The PPP has allocated $659 billion in fully forgivable SBA loans for employers to rehire and retain full-time workers while also providing funds for certain other costs like rent and utilities. However, many small business owners have stated that the program’s forgiveness requirements for employers to use at least 75% of their disbursement on payroll costs and no more than 25% on overhead create barriers to revamping their business.

Under the Paycheck Protection Program Flexibility Act of 2020, this 75%-25% ratio of forgivable expenditures would be modified to 60%-40% — with at least 60% spent on payroll costs and no more than 40% on rent, utilities and other overhead.

Employers, initially required to restore workforce levels to pre-pandemic levels by June 30, now have 24 weeks to rehire their full-time equivalent employees. The bill amends the CARES Act legislation to allow employers to defer payroll taxes.

The bill allows businesses to be forgiven for their full loan amount if they are struggling to restore their workforce to pre-pandemic levels due to operating restrictions caused by COVID-19.

“Since keeping workers on payroll obviously requires small businesses to stay afloat in the first place, we are expanding firms’ ability to use these funds to meet obligations like their rent, their mortgage, or their utility bills, but we maintain the overall requirement to avoid layoffs to keep the strong protection for workers in place,” Senate Leader Mitch McConnell said Wednesday.

The bill would also modify the loan terms for employers who choose to accept some portion of their PPP funds as an unforgiven loan by giving borrowers five years to repay the outstanding loan balance instead of two.

“This is a much needed win for the industry, as it addresses the inability for restaurants to use this loan during the shutdown and extends the dates to use the funds,” the Pennsylvania Restaurant and Lodging Association stated in a Wednesday evening tweet.

Since its April 4 launch, the PPP has been defined by post-hoc guideline updates as policy makers have evolved the aim of the aid program to meet the economic burdens of the coronavirus recession; what was initially construed as an aid package for companies to primarily retain and rehire full-time workers has been reformed as one of the sole sources of liquidity for small businesses that have seen revenue shortfalls from mandatory business closures.

Small business employers’ attitudes toward the PPP have been more positive in recent weeks as federal policymakers have addressed industry-specific struggles of small and mid-sized businesses. The NFIB’s June 2 survey reported that 66% of the 619 respondents said their PPP loan was “very helpful” in providing financial support to their business, while another 14% said it was “moderately helpful.”