Small business owners across the area are coping with the anxiety of retaining employees currently on unemployment while attempting to maintain a clean, safe working environment in anticipation of economic reopening. In order to calm their collective nerves, local banks and financial advisors have stepped in to assist those who feel paralyzed about how best to spend the stimulus money provided on behalf of the Small Business Administration’s Paycheck Protection Program. “In the beginning there was a lot of confusion,” says Chip Barret, proprietor of Ledgewood Kennel in Millerton, NY, “I don’t think small banks were set up for the PPP loan and you can hardly blame them because they basically had to rearrange their entire lending model.” The SBA recently released its Paycheck Protection Program (PPP) Loan Forgiveness Application and with a few important updated definitions and documentation requirements. It was this forgiveness component of PPP that initially drew small business owners to take out PPP loans in droves. The program promised forgiveness of loan amounts as long as owners used funds for payroll, business mortgage interest, rent and utilities.
Given that these guidelines were initially due to be released back in April, local small business owners everywhere became nervous as to how much of their loan would be forgiven once they received their funds. In the lead up to the SBA’s most recent release, the Dutchess County Regional Chamber of Commerce presented a webinar via the Zoom app hosted by its President and CEO Frank M. Castella Jr. Phil Bronzi, Senior VP and Commercial Lending Director at Rhinebeck Bank, Myriam Bouchard, a Certified Business Advisor for the Small Business Development Center for the Mid-Hudson Region and Jason Giordano Managing Partner at JGS, CPA a full service firm located in Middletown and Poughkeepsie were on hand in part to help mitigate attendees through the forgiveness process. “What we are experiencing now is unprecedented, it’s large in scale and affecting every industry,” said Ms.Bouchard, who helped advise business owners through relief efforts after 9/11. “We don’t know what the end will look like yet and that has created mass uncertainty.” Much of this uncertainty is rooted in the calculation of real numbers as it relates to PPP forgiveness. Today, the application consists of a three-part calculation to determine the amount eligible for forgiveness. According to a report from entrepreneur.com, the application asks for the payroll and qualifying non-payroll costs that the business has spent over the eight-week period since it received its PPP funds. The second step is a reduction in the forgiveness amount if you have reduced pay for employees greater than 25 percent or if you have not brought back the same number of full-time equivalent employees. The full-time equivalent employee (FTE) rule requires a small business to reduce its forgiveness request if it does not bring back the same number of employees that it had pre-pandemic.
Phil Bronzi of Rhinebeck Bank, understands the anxiety that can stem from not knowing how and if loans will be forgiven. “I admit I felt some mild panic in the beginning because of the misinformation that existed,” said Bronzi, “In truth, every lender has had to build this program from scratch.” Since the program’s inception, Rhinebeck Bank has lent over $85 million through the PPP to over 600 small businesses helping retain around 10,000 jobs. Jason Giordano echoed similar sentiments, “We are here to interpret the information we have so far. The borrower will be eligible for forgiveness based on costs incurred and payments made from when funds hit their bank account and extending from then over an eight week period.”
All three advisors emphasized the importance of each business owner becoming more comfortable and familiar with their books. “Now is the time to start cultivating great knowledge of numbers from a small business standpoint,” said Ms.Bouchard. “I encourage all owners to become familiar with line items and modifiable expenses. Get help from every resource. This can be difficult emotionally for many owners to see these numbers especially with no income for nearly two months.” For Chip Barrett, the process became easier to digest when he decided to forgo the big banks, instead deciding to trust the neighborhood lender he knows. “Thankfully, I stayed with Salisbury Bank,” says Chip, “I connected with a loan officer I knew, only borrowed the amount I needed for payroll and I am still able to pay my employees for the time being.”
For more information on the SBA’s PPP loan program, click here
To contact the Small Business Development Center’s Mid-Hudson Region call (845) 802-9150 or visit nysbdc.org
To contact Rhinebeck Bank call (845) 790-1558 or visit rhinebeckbank.com for more information
To contact Judelson, Giordano and Siegel, CPA call (845) 692-9500 or visit jgspc.com
For more information on how Salisbury Bank can help you, visit salisburybank.com