WASHINGTON — As the next round of funding for the Paycheck Protection Program is underway, some small business owners are concerned they don’t have clear guidance on the forgiveness process, which could land them with thousands of dollars in unexpected debt.

The key feature of these loans, run by the Small Business Administration, is that they are supposed to be entirely forgiven if a borrower spends most of the money on payroll and doesn’t lay anyone off.

Some small businesses worry about how the forgiveness will work if they did not receive all of the funds they initially requested.

“I went ahead and signed the paperwork with Valley Bank for $38,750,” said Bill Nobles, the owner of Affordable Contracting Inc. in Palm Harbor, Florida.

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Nobles finally secured a loan through the PPP program after weeks of applying. His major issue — the dollar amount is half of what he believes his payroll demands. He has come to this conclusion after receiving mixed messages on the maximum dollar amount of his loan.

In his experience, each bank is making their own rules about which time frame they utilize to calculate a businesses’ average monthly payroll. He initially applied with Chase Bank, and had a loan processing for $78,000. After he never heard back about the status of his loan when the program ran out of money in the first round, he decided to look for assistance elsewhere.

“I was in a rock and a hard place, but something is better than nothing, I guess,” he said in an interview with Spectrum News.

The maximum amount a company can borrow is 2.5 times its average monthly payroll cost. However, calculating Nobles’ construction business is a bit complex. He moved all his independent contractors to full-time salaried positions at the end of 2019. The payroll costs associated with those independent workers are not allowed to be calculated into the PPP the loan, bringing down the total amount.

So, his bank opted for another option.

“We actually took his first quarter of 20(20) and used that number to come to his number,” said Jim Downey with Valley National Bank, who has been working on Nobles’ case.

Downey said Valley National Bank has processed over 10,000 PPP loans so far. While Nobles is grateful for some financial assistance, he’s concerned the figure the bank determined ($38,750) isn’t an accurate portrayal of his business’ needs since the virus had already taken a major hit on his business by the end of February.  

“I have to hire back 90 percent of my staff, and I have to pay them for 8 weeks, using at least 75 percent of these funds,” Nobles said.

He’s not sure that money will be enough to get the loan forgiven. Instruction for the forgiveness process is not clear, even for bankers.

“I haven’t seen a whole lot on the backend because all I’m really worried about is getting people into the application. I don’t know what the next steps are for the waiver on the back end,” Downey admitted.

Nobles initially had some questions about what time period would determine how many people would need to be hired back to meet the 90 percent threshold to  get the loan forgiven. Downey believes he would need to staff up to levels before the pandemic.

“On the application it asks you at the time of application, how many employees you have. So, I’m assuming it will be based off of now,” Downey explained.

“But, it’s not my expertise. Before this, I didn’t deal with anything in payroll before a couple of weeks ago. It’s been 16 hour days, just trying to get all the applications we can through the system,” he said.

While Nobles did not receive all the funding he needed, he said he is moving all of his accounts from Chase to Valley National Bank after they guided him through the loan process.

“In a 20-hour time period, from start to finish, with Valley Bank, they were able to do the application, get it approved by their bank, get it approved by the SBA,” Nobles explained.

Once the money shows up in his account, he recognizes he’ll have some difficult decisions to make.

“I’m going to do my best to bring back everybody, whatever I can do,” he said.