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Written by Breanna Hardy
More than a month into the second round of the Paycheck Protection Program, community banks have cited mostly smooth sailing.
With about $150 billion left, there’s still time for small businesses to apply for funds. Beginning yesterday, the Small Business Administration began processing applications exclusively for businesses with 20 or fewer employees. This will take place for a two-week period ending March 10.
For Visalia-based Suncrest Bank, the majority of small business customers fit that category. Chief Operating Officer Steve Jones is hopeful it will speed up application processing.
“They are taking a week to possibly even 10 days on some of these applications, and I think with them focusing just on these smaller ones, that’s a better advantage to those smaller customers to get this second draw of PPP funds,” Jones said.
The extra amount of PPP2 funding approved by Congress has allowed Suncrest and other community banks to work with customers on the additional paperwork needed, such as showing reductions in revenue, for application filing.
Jones said at the beginning of the week that Suncrest was currently processing more than 250 applications.
Suncrest has partnered with a financial technology provider, Numerated, which processes applications and makes changes to the online portal as new stipulations arise.
“The big challenges are, what we say, ‘the building of the airplane while it’s flying,’ which is a really good analogy for what the SBA is having to deal with,” Jones said.
The bank has processed about $55 million in PPP2 applications, Jones said. But applications have slowed down.
Local banks agree that this round of PPP has gone much smoother than the last round, and money is still available for business owners who need relief.
Jim Ford, president and CEO of Central Valley Community Bank in Fresno, said that so far, it’s gone smoothly.
Last round, they hand-processed every application, but this time they’ve also partnered with a financial technology partner to automate applications. Though it’s alleviated the staff of working extra long hours, it’s come with some hiccups.
“There’s been some challenges this time with how the SBA is processing the applications. I think it’s pretty well-publicized that banks are receiving error messages and error codes,” Ford said.
The codes, related to applicant qualifications, required bank officials to confirm data, which took time. But that hasn’t been the highest barrier.
“I’d say right now the biggest challenge really isn’t about putting new applications in. It’s getting under $150,000 forgiven from the first round,” he said.
The SBA did release a simplified forgiveness form for loans under $150,000.
“They still aren’t allowing banks to process those applications,” he said. “It looks like it’s going to be March before that’s the case.”
He said for Central Valley Community Bank, the majority of loans were under $150,000.
The bank processed almost 1,100 loans last spring, totaling nearly $212 million. So far in this round, it’s had just over 300 applications, which total more than $60 million.
“So quite a bit less. And we expected that. We did not anticipate anywhere near the numbers we had in the spring, primarily because this is more targeted,” Ford said.
This round, businesses must demonstrate a quarter-over-quarter loss of at least 25%. A majority of clients this round are second-draw borrowers — upwards of 90%, Ford said.
Last time, there was concern the money would run out, and bank staff worked long hours to process loans.
“It created a lot of stress for banks and clients, and this time it’s much more orderly. I think people know there were plenty of funds allocated for the folks that this is intended for. And I don’t see the level of anxiety,” Ford said.
This time, the bank is seeing clients start applications that could be left unfinished for a few days.
“That tells me that clients aren’t as concerned about the money running out by the time they finish their application,” Ford said.
Applicants also know what they’re up against, Ford said. This time, they know how to fill out the application and know what to expect.
Lo Nestman, president and CEO of Premier Valley Bank, also said it hasn’t been the frenzy it was last spring.
Applications opened Jan. 19, and its narrowed rules ensure availability for businesses that need the relief to survive.
“This time around it’s for companies that are in dire need,” Nestman said.
At the pace money is currently being lent out, Nestman says that it will last until mid-March.
“As an organization we’ve received a little over 2,000 applications. For us here locally, we’ve received over 150 applications. And we’re a little bit more than $20 million in loan assistance,” Nestman said.
Loans are averaging $130,000-$150,000. He said it’s been mostly second-draw applicants.
There’s also a few clients who didn’t feel they needed a first-round PPP loan, and are taking this opportunity to take out a loan.
“I’ve received numerous emails and a couple of conversations with individuals who are saying that the second round of funding has helped keep their business afloat. They’ve been able to keep their doors open,” Nestman said.
Some of his clients have said that if it wasn’t for the second round of PPP, they wouldn’t have made it.
The SBA’s portal also changed this time around. Last time, the SBA used a portal called E-Tran, but the system was getting backed up. The SBA changed the portal to accommodate need, but banks built their second round systems around E-Tran.
“As we were going into this, we had built our internal systems around the first portal that we used,” Nestman said. “Every bank was a little delayed in the beginning because of that.”
But after changing their systems to fit the new portal, processing loans hasn’t been quite as bad.