A new crisis is looming for New York small businesses if they do not apply for the Paycheck Protection Program’s (PPP) “Loan Forgiveness Program,” said one banking industry leader.
Many of these small business owners are not aware that they need to be submitting applications to have their loans forgiven. Deadlines are rapidly approaching that could leave them having to pay back these loans. If they don’t make their payments, then the federal government will pursue them to recover the funds by any means necessary.
“We at Ponce Bank believe that there is a lack of understanding about the need to apply for this important ”Loan Forgiveness Program,” says Carlos Naudon, president of Ponce Bank. “By not applying, thousands of our most vulnerable small business people are sure to be saddled with a debt that they cannot afford to pay back; especially as many continue to struggle with the continuing negative impact of Covid. In most cases you need only to fill out a super-simple form that requires no supporting documentation (if their loan is under $150,000 which most of our loans are).”
The “Loan Forgiveness Program” means the loan doesn’t have to be paid back and in the case of loans below $150,000 the process is extremely simple and requires no-documentation. It’s imperative that we educate our community about the importance of applying for PPP forgiveness if you received a PPP loan, Naudon said.
Imagine how many of the tens of thousands of businesses who secured their loans through highly automated, low-touch, digital channels may share in this danger, Naudon said. These high-volume lenders have little incentive to nurture their customers through this process and it’s likely that many thousands of small businesses who received funds that could easily be converted into grants, may find themselves facing collection proceedings from the U.S. government.