PPP Loans Open to Small Banks Friday, All Lenders Tuesday
(Bloomberg) -- The Paycheck Protection Program, which restarted this week with $284 billion in pandemic-relief loans for U.S. small businesses, will open to small banks on Friday and all lenders next Tuesday.
Banks with $1 billion or less in assets will be able to send in applications for business owners seeking a PPP loans for the first time and those applying for a second one on Friday at 9 a.m., the U.S. Small Business Administration said. All PPP lenders will have access to the agency’s loan portal next week.
Starting Monday, the SBA had made the loans exclusively available to community lenders -- including Community Development Financial Institutions, Minority Depository Institutions, and Certified Development Companies -- in an effort to reach some of the smallest and more vulnerable firms that were left behind in the first round. The first two days were dedicated to business owners who applied for the first time.
The agency didn’t specify how many loans have been made since Monday. Congress approved additional PPP funding in the Covid-19 relief package that passed in December, after the initial PPP program ended in August with more than 5.2 million loans worth about $525 billion.
“SBA has worked expeditiously to ensure our policies and systems are re-launched so that this vital small business aid helps communities hardest hit by the pandemic,” SBA Administrator Jovita Carranza said in a statement Wednesday.
With the new money, businesses will be able to apply for a second loan, but there are stricter rules. Firms can have a maximum of 300 employees, down from 500, and the maximum loan amount this time is $2 million, a decrease from $10 million. Applicants also have to prove that revenue declined at least 25% in any quarter in 2020 compared with the previous year. The loans are forgiven when they are used to cover payroll and other approved expenses, including property-damage costs, supplier costs and personal protective equipment for employees.
The SBA has cautioned that additional fraud filters and identity checks in place this round will mean longer turnaround times for loan approval. Rampant fraud during the first round of PPP lending spurred the agency to add additional screening to the loan application process.
Alan Lane-Murcia, the SBA Program Manager at First American Bank, said the SBA has told banks that they may need to wait one to five days for when an application is submitted to when a loan number is issued. The bank then needs to finalize the loan, he said. That means it could be the last week in January or early February until many PPP applicants actually receive the money, he said.
“I’m going to go with the five-day number and if I get it in two, I’ll be happy,” Lane-Murcia said. “People are anxious -- they need the capital.”
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