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Vermont businesses navigate COVID emergency loan repayments

Published: Oct. 19, 2020 at 5:59 PM EDT
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BERLIN Vt. (WCAX) - The federal government is changing rules which could mean thousands of small Vermont businesses won’t have to pay back loans they received to stay afloat after the pandemic hit. As Calvin Cutler reports, businesses that received less than $50,000 as part of the Paycheck Protection Program will most likely have most, if not all, of their loans turned into grants through a streamlined process. But for some businesses that received the loans initially, turning it into a grant isn’t as easy as it seems.

At Twin City Family Fun Center in Berlin, the bowling pins are ready to be knocked down and comfort food is on the grill.

The bowling alley’s manager Harold Bramlitt says the PPP loan saved the business after he was forced to close in March. “We would not be open without it. We have a staff of 30 to 40 people -- they would have been all unemployed,” he said.

With the loan, Bramlitt hired back staff for the lanes, arcade, and restaurant. He’s one of some 13,000 Vermont businesses that collectively received over one billion dollars. Since he followed federal guidelines -- with 60% of the funding going toward payroll -- much of his loan was converted into a grant which he won’t have to pay back. “We spent that money because didn’t want to be left with a loan that we would then have to repay,” Bramlitt said.

But for others, receiving loan forgiveness from their lender isn’t as easy as it seems. The road is riddled with paperwork and nuance. “We are taking a lot of calls about -- ‘How did they qualify? Did they use the funds correctly? Which forms do I use? I don’t understand the criteria,’” said Susan Mazza with the Small Business Administration in Vermont.

The SBA is now attempting to streamline PPP forgiveness applications for businesses that received less than $50,000. That’s over 8,000 Vermont businesses which most likely won’t have to pay back their loans or will have to pay only a fraction.

“We’re hoping it’s going to allow businesses to not worry about it, feel a lot more comfortable with the fact that they won’t have to navigate all these rules about what’s a full-time employee, what’s a part-time. You won’t have to worry about that stuff,” Mazza said.

But businesses that got more than $50,000 and can’t meet forgiveness requirements will face paying back the PPP loans. For loans issued after June 2nd, there is a five-year payback window. For those issued before June 2nd, businesses will have to work with their bank, meaning the lenders could ask for their money sooner.

“As we go forward, we’re going to learn a lot about which banks are making this easy, which banks aren’t making this easy, and what loans have some jeopardy of not being completely forgiven and why,” said Leo O’Reilly with O’Reilly Business Services, a South Burlington accounting firm.

Back at the bowling lanes, Bramlitt says the loan, along with grants from the state, helped him keep his doors open. But he says if he had known he’d had until the end of the year to pay back the loans, he would have used the money differently. “I don’t know, if we had to apply for other state grants and get any more of that money, maybe some of it but not as much. Then that money is there for someone else who didn’t get to the front of the line like we did to start with,” he said.

Along with the PPP loans - Vermont businesses have received millions in help from the state.

State leaders Tuesday will be announcing a third round of $76 million in small business grants.

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