MONTPELIER — With the seventh month of the coronavirus pandemic approaching, the lenders who helped thousands of Vermont businesses obtain Paycheck Protection Plan loans last winter are now delving into the business of seeing those loans converted to grants.
About 12,740 Vermont businesses received loans worth $1.2 billion from the PPP, a program Congress and the U.S. Treasury put together in the early days of the pandemic in March to assist businesses hurt by the economic shutdown intended to prevent the spread of the virus. The PPP, part of the $2 trillion federal coronavirus relief bill, is a federally guaranteed loan program designed to help employers with cash flow.
The $349 billion program launched in April. In June, the federal government changed the rules to make it easier for a wider array of businesses — such as those in the hospitality field  — to claim PPP loans even if they were not able to spend the money on payroll within a previously set time frame.
Under the PPP program, the 1% interest loan will be forgiven if at least 60% of the money is used to cover payroll. Applications to the Small Business Administration for the loans closed Aug. 8.
Data from the SBA showed that millions of dollars flowed into Vermont through the PPP program, with seven organizations approved to receive as much as $10 million. The bulk of the loans went to the state’s more populated areas, such as Chittenden County. Businesses in Burlington received 600 PPP loans, according to a report from the U.S. Department of the Treasury. 
Vermont Academy, a private high school in Saxtons River with 200 students, was approved for $1.1 million to allow it to retain the equivalent of 96 full-time positions, said school spokesperson David Petrie. The school used the money for payroll and benefits — one of its largest annual expenses — and for utilities on the 147-year-old campus.
“We were in a situation where we had a lot of support staff, where if it wasn’t for PPP they would otherwise have been laid off,” Petrie said. He said the school’s bank opened its portal for forgiveness applications last week.
Nationally, 5.2 million PPP loans worth $525 billion went out this spring and summer, according to the SBA’s latest report on PPP funding. About 5,400 lenders participated, the SBA said. Nationally, 12% of the loans were $50,000 or under, and 6% were for more than $5 million.
The average loan size was $101,000, the SBA said. The sector that received the largest share of PPP loans, at nearly 13%, was health care and social assistance; construction received about 12%. About 8% of loans went to accommodations and food service. 
Businesses that did receive PPP loans are now working with their accountants and their lenders on the paperwork needed to convert those loans to grants.
“We have clients who have spent all the money now, and applications for forgiveness are just being accepted by the banks,” said Leo P. O’Reilly of O’Reilly & O’Reilly Business Services Inc., who helped several restaurants with PPP paperwork. O’Reilly said the loans were critical in helping his restaurant clients make it through several months where they were closed altogether, open on a limited basis, or left without customers because of quarantine regulations on out-of-state visitors.
“I think most of them would be out of business without it,” he said.
The loan forgiveness paperwork is complex, said Karim Houry, who owns the Woodstocker B&B in Woodstock. He’s hoping the federal government will approve changes that make the recipients of loans under $150,000 — Houry’s business received $8,000 — eligible for a fast-track one-page loan forgiveness application.  
Most of the Vermont loans are under $150,000, said Cassie Polhemus, CEO of the Vermont Economic Development Authority, which has also been administering PPP loans. She’s also hoping for a simplified loan forgiveness application.
“People don’t really need more debt right now; they just need money they don’t need to give back,” Polhemus said.
The American Bankers Association says it has joined 51 state banking associations to ask the Treasury Department and the SBA to make it easier to apply for loan forgiveness. They, too, want to see a single-page form in which business owners could attest they had met the loan forgiveness conditions.
“With negotiations on a comprehensive Covid-19 relief package stalled, and with the clock ticking before Congress adjourns for an extended period, we urge you to take immediate administrative action on this issue,” the ABA said in its Sept. 18 letter.
O’Reilly said he expects to see a bill from Congress in the next two months that will include a second round of PPP funding.
“It’s a lot of political posturing at the moment, which is unfortunate, because there are real-life things that need to be addressed,” he said.