Image via flickr user Jernej Furman

published on January 7, 2021 - 2:36 PM
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The new stimulus package, totaling $900 billion, sets aside $284.45 billion for the second round of the Paycheck Protection Program (PPP2). While businesses and lenders say the first round was unclear due to ever-changing rules, local lenders are optimistic about participating this time around.

Dennis Woods, CEO of United Security Bank in Fresno, said his bank will be participating in the second round of the Paycheck Protection Program. They are on standby until guidance is issued to lenders, but Woods is hopeful they can begin taking applications soon.

“I suspect by the end of the week we might know for sure what’s going to happen,” Woods said.

The debate about individual checks in the Senate is keeping the legislation from activating, he said.

The legislation scales nearly 5,600 pages and includes rules about individual stimulus checks. Until the final amount is determined for individual checks, the banks won’t have the entire scope of rules sent over regarding the small business loans.

The maximum loan amount has gone from $10 million in the first round to $2 million in the second round.

“That may take some of the larger corporations out of the competition,” Woods said.

While the second round of PPP might feel daunting to some businesses, the legislation in this round promises tax deductibility for business expenses paid for with PPP loans.

Eligibility to apply requires that businesses have 300 or less employees, have used their entire first PPP loan and can show a quarter-to-quarter loss between 2019 and 2020.

The PPP2 will prohibit first-time applicants with nonprofit status, including churches. First time applicants may receive a loan if they have 500 or fewer employees. Sole proprietors, independent contractors and self-employed individuals will also be able to participate.

Forgiveness is the same in PPP2 as PPP1: you’ll be forgiven if the money is spent on payroll, utilities, rent or mortgage payments.

Ciaran McMullan, CEO of Suncrest Bank in Visalia, is participating in PPP2. He’s very optimistic about the rollout with some experience under their belt.

“Last time the Treasury Department had to act extremely quickly. The SBA had to act extremely quickly. We’ve now got all that experience behind us, so I’m really optimistic that this time around it’s going to be a lot smoother process both for borrowers and for lenders,” McMullan said.

McMullan also thinks the rules will be a lot clearer in the second round.

“I think all of that will be better this time around, and I think it will be easier to understand and we’re looking forward to participating,” McMullan said.

Another difference between PPP1 and PPP2? Working with a “fintech” partner, short for financial technology. It allows them to process their loans online and be much more efficient.

“We’ll lessen greatly the impact on our staff and create a much better experience for our borrowers. First time around, we had to do a lot of it manually,” he said.

This time around, banks will be better prepared, and make a much better use of technology.

“We were doing that with almost 50% of our staff trying to work from home,” he said. “We had staff preparing loan documentations around a kitchen table at home.”

“I think community banks in particular really — and I don’t just mean Suncrest, I mean all my colleagues at all our other local community banks — all did a wonderful, wonderful job in delivering PPP round 1, and I think community banks will step up again in this second round,” McMullan said.

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