To combat the economic burden of the coronavirus pandemic, banks issued Payroll Protection Program loans to hundreds of thousands of Texas organizations, including at least 340 lent by local banks to El Campo businesses.

The application for PPP loans closed on Aug. 8, with $11.1 million issued to El Campo area businesses during the first round of loans, according to estimates from the City Development Corporation of El Campo.

More than 100 PPP loans were issued to local businesses by the El Campo Prosperity Bank branch.

“It was great to be able to do it and be able to get it out to the people in the community who really needed it,” Regional President Linc Lutrick said.

The First State Bank in Louise issued about the same number of loans, with 108 being lent to businesses in the 77437 zip code.

“In my opinion, all the local banks did a fantastic job, which was a good example of why the community banking system is so important to communities like ours,” FSB President Kinnan Stockton said.

The PPP program deadline was extended an extra month from its original deadline, allowing banks to issue a second round of PPP loans in July and early August.

About 348,000 PPP loans were given in Texas during the first loan application period. Preliminary data for the second round of loans shows about the same number of Texas businesses received loans as during the first round.

During the early months of the COVID-19 pandemic, the banking industry had slowed some, like most industries. However, when the PPP program rolled out, banks had little time to prepare before businesses turned to them for loans.

“At the time, traditional lending demand had slowed considerably so we mobilized our lenders and lending staff to concentrate on PPP,” Stockton said.

The Small Business Administration issued PPP guidelines to local banks before the program opened.

“It was kind of wild and crazy doing these PPP loans and trying to get those out just because of the communication from SBA to local banks on requirements and what they were looking for,” Lutrick said.

PPP loans have a one percent interest rate, but payments will be deferred for six months, according to SBA. PPP eligibility was based on whether the small business was impacted by the pandemic, the size of the company, number of employees, and other factors.

In general, the loans will be forgiven if 60 percent of the loan was used for payroll costs, but the SBA added further rules in August concerning percent ownership of the company and whether the company owns or rents its building, according to Forbes.

The typical process for issuing a loan is not the same at all to the PPP loan process, Lutrick said, but on average, Prosperity may issue about 20 loans per month. Prosperity banks issued 13,000 PPP loans, so to tackle the added workload, Prosperity employees worked more hours.

“We had a team of about four or five of us here locally who worked a lot of hours and a lot of weekends,” Lutrick said. “We tried to get them done as quickly as we could.”

Across FSB’s branches, the “loan volume” increased by about $42 million due to PPP. FSB leaders created a PPP loan team and a question-and-answer team to try to streamline the process.

“All the other local banks participated, and we all worked together at some level and cooperated to help small businesses and those in need,” Stockton said.

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