Two area bankers say no hurry on PPP forgiveness

Those who received pandemic-generated Paycheck Protection Plan (PPP) money through the Small Business Administration may wonder whether those low-interest loans will be forgiven.

The advice from First Missouri State Bank’s Jay Knudtson and Montgomery Bank’s Jim Limbaugh to recipients is the same — sit tight and wait.

“The speed at which information is changing (about PPP) is faster than anything else I’ve ever seen,” said Knudtson, First Missouri State’s executive vice president and former Cape Girardeau mayor.

The application period for PPP expired Aug. 8 and Knudtson called the program “one of the most brilliant (government) incentives” he’s ever witnessed.

Within three months, the SBA program handed out $520 billion in PPP loans designed to preserve workers’ jobs during the COVID-19 emergency.

Available to small businesses with 500 employees or fewer and funded through the Coronavirus Aid, Relief and Economic Security (CARES) Act, the money was designed to cover up to 24 weeks of payroll, interest on mortgages, rent and utilities. The self-employed were also eligible for PPP money.

Technically, PPP is a loan, but Limbaugh — Montgomery’s regional president and company executive vice president and also a member of the Southeast Missouri State University Board of Regents — thinks few of his bank’s PPP recipients will have to make repayment.

Limbaugh points to a bill working its way through Congress forgiving all PPP loans under $150,000.

Of Montgomery’s 650 PPP loans, 80% fall under the $150,000 threshold, Limbaugh said.

Limbaugh said Montgomery has provided PPP loans ranging from $2,100 all the way up to $6 million.

He said Montgomery is “suggesting those who got PPP money sit tight” for now, saying government guidelines are changing rapidly and are “keeping everybody off-balance.”

Knudtson said PPP was a loan without discrimination.

“In the end, churches got it, nonprofits got it, small yard maintenance companies got it and large companies did, too,” Knudtson said.

The FMSB executive, who served as Cape Girardeau’s mayor from 2002 to 2010, said he was particularly happy the bank could make a loan as small as $1,000 — “to a guy who cuts yards,” he said.

Knudtson demurred when asked how many PPP loans came through his financial institution, saying, “We processed our fair share.”

Knudtson is unambiguously bullish about the SBA program.

“(PPP) brought people back to work who otherwise would have been furloughed,” he said.

Limbaugh, who said PPP unquestionably helped keep businesses afloat and employees on the job, had a somewhat different tack and advised caution.

“I’m nervous of the long-term effect (of PPP) on our national debt,” Limbaugh said. “Time will tell.”

While an application for PPP forgiveness is available on the SBA website, both Knudtson and Limbaugh suggest holding off on filling one out.

“There is no incentive to apply for forgiveness (now),” said Knudtson.

“Since there is a strong likelihood (of forgiveness), in my opinion,” he added, “holding off will save a lot of perhaps unnecessary paperwork and time.”