PPP Process Proves Difficult to Navigate for Bankers and Clients

Keeping up with the constantly changing process surrounding the federal Paycheck Protection Program and what will ultimately qualify for loan forgiveness can be exhausting – just ask David Felton, Cambridge Trust’s senior vice president and director of business banking.

Cambridge Trust, along with Wellesley Savings Bank, which the former acquired in December, as well as their  commercial lenders, together processed a total of 896 PPP loans in a three-week period, and in all, Felton said these loans, which totaled $198 million, were responsible for saving an estimated 16,800 jobs.

Cambridge Trust’s branch at 65 Beacon St.

Besides having a hand in processing all of these loans, Felton personally handled about 60 of them, and when they were approved, he called each of his clients to give them the good news. One woman was so elated upon speaking with Felton that she broke into tears and told him that the approval of her loan would result in 15 saved jobs.

“Some banks cherry-pick their clients… and we heard that a lot of banks wouldn’t even pick up the phone, but with us, it was first-come first, first-served,” Felton said. “With us, it wasn’t based on [the clients’] size, and we tried to help everyone equally. We got every loan approved, but it was a process with the rules constantly changing.”

These changes to the rules came in the form of new Interim Final Rules issued by the federal government’s Small Business Administration that amend the restrictions for the PPP process and loan forgiveness.

“It seemed like every two weeks, the SBA put out information on new process changes to the program, and what’s forgivable and what’s not,” Felton said.

The first Interim Final Rule came in at around 10 p.m.  on the eve of the program’s launch, Felton said, which put clients seeking loans through a more strenuous and detailed application process.

“We went to clients and had to have them fill out new applications,” Felton said. “The process was difficult for banks because during the loan process, underwriters typically look at the client’s credit and tax returns, and their ability to repay, but they were now asked to understand payroll documents.”

A subsequent Interim Final Rule altered the breakdown for how loan monies must be spent from 75 percent on staff and the remaining 25 percent on overhead, such as rent and utilities, to 60 percent for staff and 40 percent for other costs, while another extended the period in which the funds must be spent from eight-weeks through the end of July to 24 weeks until mid-October.

Babak Bina, who with his sister, Azita Bina-Seibel,  owns and operates Bin 26 Enoteca on Charles Street, as well as another restaurant,  jm Curley in Downtown Crossing, is among the clients that received PPP funds through Cambridge Trust and have already submitted applications asking for loan forgiveness.

“There’s no doubt that the loans helped people tremendously, including us,” Bina said. “In retrospect, we’re very thankful we were able to get the applications in and work with our bank.”

And while he appreciates that the Interim Final Rules have in some cases eased restrictions for banking clients, Bina said they came as little relief to him, since he was already adhering to the original terms of his loan when the new federal guidelines were announced.

“The difficult thing for us was as a part of the first wave [of loan recipients], we lived by the original mandate to spend it all within eight weeks,” Bina said, “and on the seventh week, they amended  it to 24 weeks. That really didn’t help us because we’d already spent the money.”

Bina said the other new regulation that reduced the amount of the loan that must be allocated for paying staff  to 60 percent from 75 percent also came too late to do him any good.

“There were other challenges like not being able to get employees to come back to work and the fact that we essentially were given a loan, which we were mandated to spend when we couldn’t be open,” Bina said. “Ostensibly it was challenging when we still had to get the green light from the state to reopen, but we found ways to get the staff to come in and get the restaurants ready for reopening.”

Bina extended his gratitude to Cambridge Trust and Roma Mayur, their account manager at the bank, for helping them through this arduous process.

But now Bina is left wondering whether his PPP loan will ultimately be forgiven.

“Ultimately, we have to see with the final rules, where our expenditures fall,” Bina said. “We have to submit our paperwork and pray for the loan to be forgiven and not have to be paid back. We also suspect they will come back and ask for payroll receipts [and other supporting documentation].”

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