Millions go to local small businesses in COVID relief loan program ... but will they have to repay it?

Banks in the local area doled out tens of millions in funding through the federal government’s Paycheck Protection Program, a $659 billion part of the Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law in March.

The program offered loans to businesses through the federal Small Business Administration to help cover payroll expenses during the pandemic, with the potential opportunity for loan forgiveness after a period of time.

Statewide, more than 84,000 businesses and entities received loans through the program, including 11,516 companies allotted more than $150,000.

“I was very proud of my team and the amount of applicants and the number of folks we were able to help,” said Scott Spencer, president and CEO at Sterling Bank in Poplar Bluff.

“I was totally on board with the program. We doled out as many applications as we could and as many dollars as we could, and we’d certainly support another round or two to get through this COVID,” Spencer added.

“It was very meaningful for the community, and we were able to take care of all of our existing customers and some new ones,” said Paul Tucker, president of First Missouri State Bank in Poplar Bluff. “The program has been a huge shot in the arm for a lot of local businesses around here. It’s allowed them to continue to pay their people even though they were short-staffed or closed.”

Keeping people employed, said Bank of Missouri President Kevin McCormick, was a great motivator of the program.

“Our biggest thing we’re proud of is the fact we were able to keep these jobs intact,” said McCormick, who estimated loans disbursed through his bank in Southeast Missouri kept up to 3,000 people employed.

The amount of money distributed locally varied, and some banks chose not to provide specific numbers.

In addition, the U.S. Small Business Administration only released the names of those businesses receiving more than $150,000, which accounted for only 13.5% of all loans processed.

That information can be found online at https://home.treasury.gov/policy-issues/cares-act/assistance-for-small-businesses/sba-paycheck-protection-program-loan-level-data.

“We processed 1,700 loans, totaling $134 million across our system,” said Southern Bank President Greg Steffens. “In the local area, we did 500 loans for $47 million.”

Across his regional branches, Steffens said, loans went to Dexter businesses in the amount of $19 million, Poplar Bluff and Qulin businesses totaling $24 million, Van Buren businesses getting $1 million and Doniphan businesses receiving $3 million.

“Overall, I would say we did more than I would have expected,” Steffens said.

At First Missouri State Bank, which serves primarily the Poplar Bluff area, Tucker said, “We did do a substantial amount of loans for a substantial amount of money,” however specifics were not provided.

At the Bank of Missouri, McCormick said, 1,426 loans were processed system-wide for $113 million, but a local breakdown was not available.

Spencer, at Sterling Bank, said, “We gave out a bunch of it, in the tens of millions. We’re going to continue to work with our small business customers to try to make sure they get whatever funds and advantages from the program they can to help them survive.”

There was hope for a second round of loans, but Congressional action has stalled.

“It’s terrible it got politicized,” said Spencer. “I’m disappointed Congress couldn’t get together and give us another round. I’m disappointed in the back-and-forth in the rules and rule making. They say they want to support small businesses, but they really ended up making it too political.

“Maybe after the election, we can get our folks to quit playing politics and give small businesses what they need.”

After the initial loan process, each banker said, the second part of the PPP program was to be loan forgiveness, but details from the federal government have been sketchy and have changed regularly.

“They changed the program to where at first it was eight weeks (to apply for forgiveness), and then they extended it longer,” said Steffens. “We have not processed any forgiveness at this time. We’re waiting for the government to put out more guidelines.”

Where the “real help will come in, if they want to help local businesses and the communities, is on the forgiveness side,” said Tucker. “If they’ll give clear guidance and take care of that in a timely manner, it would be great.”

McCormick said his staff is “kind of waiting on the sidelines to see if Congress acts.

“There is some speculation they could just go ahead and forgive the loans that are $150,000 or less.”

Even without clear federal guidance, McCormick said, his bank has hired an outside firm to develop an online forgiveness application, which should save time once Congress decides on the final process.

Editor’s note: Officials from other local banks did not return calls seeking comments.