BANK OF BRENHAM ASSISTANT VP EXPLAINS UPCOMING FEDERAL SMALL BUSINESS RELIEF

  

Many small businesses locally and around the nation are still unsure of what is coming in the form of federal COVID-19 aid signed into law last week, and when they can expect that relief.

Part of the $2 trillion rescue package known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act includes $350 billion to prevent small businesses from having to close or lay off employees.

Gary Durrenberger, Assistant Vice President and Loan Officer for Bank of Brenham, said this situation continues to be very fluid and difficult, because while the federal government is saying it will provide this assistance, it still has to trickle down from the federal level to the state, and then to banks.

 

As of Monday, Bank of Brenham began processing Payment Protection Program loan applications at the bank and sending them to the Small Business Administration (SBA).  The primary intent of the program, according to Durrenberger, is to assist local businesses with 500 or fewer employees with their payroll, so they can either maintain their payroll or hire back employees they had to lay off.

Durrenberger said businesses are able to apply for up to 2.5 times their average monthly payroll expenses from 2019, and that the SBA is not being very particular on what it is requiring from applicants.

Once a business receives its loan proceeds, it will have eight weeks to inject the money into its cash flow.  Durrenberger said, while the primary use of the proceeds will be for payroll, there is a 25 percent variance that can be used for other, limited purposes.

 

If a business uses the funds for something outside of the intended scope, then the loan is no longer forgiven and will need to be repaid.  However, Durrenberger said the repayment terms are “very liberal”, consisting of 1 percent interest rate payments over a two year period.  In addition, the SBA is deferring the six months of payment.

Durrenberger said the big unknown at this point is how long it will take to get this money to the people in need of assistance.

 

Durrenberger said Bank of Brenham is currently working with about 50 to 60 businesses to get them assistance.  He said not all of them have submitted the information the bank needs to get their requests processed, but if all of them were to apply, he would be looking at $12-15 million in requested aid for local businesses.

Durrenberger said this continues to be a difficult time, but the bank is doing its best to hold together, put new policies and procedures in place, and be there for its customers and the community at large.