Banks working overtime on aid program

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By Harrison Connery, Republican-American

NAUGATUCK — Ion Bank and Webster Bank are processing more than 7,000 applications for a federal stimulus program intended to prevent layoffs at businesses affected by the coronavirus.

Ion Bank CEO and President David Rotatori said his staff worked late into weeknights and through the weekend to file applications for the program, which could run out of funding by Friday.

“We had teams working until 10 p.m. trying to get as many keyed in, as many as we could,” Rotatori said.

The Paycheck Protection Program, run by the U.S. Small Business Administration, was part of the stimulus package signed by President Donald Trump on March 27. The program generally provides loans for businesses with 500 or fewer employees. Companies can borrow up to two and a half times their monthly expenses, eight weeks of which can be forgiven if at least 75% goes to payroll expenses. In their application, companies must provide 12 months of payroll information, the number of employees and average monthly salaries.

On Friday, White House National Economic Council Director Larry Kudlow said 661,000 loans for $168 billion had been approved nationally.

Ion Bank closed 100 applications for $30 million with another 600 in the queue. On Friday, Webster Bank was in the final stages of closing on 220 applications for $110 million and had another 6,300 in the pipeline, representing $1.5 billion. Both banks report many new customers as a result of the program.

“This is a much higher volume than what we would normally have based on the interest you might expect,” said John Guy, executive vice president, director of business banking at Webster Bank. “That number will be growing every day.”

Massive demand for loans and the rush to put money in the hands of business owners created confusion and problems along the way.

“The system got overwhelmed and a lot of banks were getting kicked out, so it was really hard to get any progress,” Rotatori said, describing technical issues on the SBA’s online portal for the program early last week.

He said there was a scramble over the weekend to submit as many applications as possible after the SBA announced a 10-day window to finish and fund them.

“We were five days in when they told us,” Rotatori said.

Guy said Webster has had similar difficulties processing requests.

“Almost every day there is a response to a question that banks and customers have raised. They’ve done a pretty good job trying to address these things, but it’s kind of like trying to change the tires while the car is already moving,” Guy said.

On Friday, White House National Economic Council Director Larry Kudlow projected that the small-business loan program will run out of money April 17. The White House and Republican leaders want to boost that amount to $600 billion to give more small businesses an opportunity to get relief before the funding dries up. Democrats want to allocate half of that for the existing program and allocate $125 billion differently, mostly to smaller financial institutions that specialize in lending to minority-owned businesses and those without established relationships with the big banks that dominate the existing SBA program, as well as disaster relief programs.

“At some point we will run out, but I think they will add to it,” Rotatori said.

The Associated Press contributed to this article.