Written by Breanna Hardy
The U.S. Small Business Administration, in consultation with the U.S. Treasury Department, has given all participating lenders a date for the Paycheck Protection Program (PPP) to reopen.
The loan portal will open to lenders with $1 billion or less in assets for First and Second Draw applications on Friday at 9 a.m. Eastern Time. After that, the portal will be completely open on Jan. 19 to all participating lenders.
Thus far, the SBA has only granted access to Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries with the goal of targeting underserved and minority small businesses.
Fresno-based Access Plus Capital was the only local financial institution able to start submitting the loans on Monday, the first day. Applications were only available to existing customers.
For smaller lenders gaining access on Friday, the emphasis will continue to be on smaller businesses.
“A second round of PPP could not have come at a better time, and the SBA is making every effort to ensure small businesses have the emergency financial support they need to [continue] weathering this time of uncertainty,” said SBA administrator Jovita Carranza. “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. I strongly encourage America’s entrepreneurs needing financial assistance to apply for a First or Second Draw PPP loan.”
First Draw loans are for borrowers who did not take a loan from PPP1 before Aug. 8, 2020. Businesses can apply for the Second Draw, PPP2, if they have 300 employees or less, received and used their PPP1 money correctly, and can show a 25% revenue reduction between two respective quarters from 2019 to 2020. PPP2 borrowers can receive up to $2 million this time around.
Forgiveness from PPP1 is in full swing, too.
The U.S. Small Business Administration has already forgiven 1.1 million paycheck protection program loans for over $100 billion, relieving America’s small businesses within three months of the PPP’s covered period ending. This comes on the cusp of all banks being allowed to start processing loan applications.
Carranza said that the quantity of forgiveness is a key indicator that the PPP is working for all small businesses across the country.
So far, the SBA has received more than 1.3 million forgiveness applications for approximately $170.5 billion. The SBA has made payments on nearly 85% of the applications, forgiving over $100 billion. Some 88% of small borrowers have been forgiven, which covers loans up to $50,000.
“For any eligible small business continuing to struggle due to the coronavirus pandemic, the Program has re-opened for new and certain existing PPP borrowers, and we encourage you to take advantage of the PPP to keep your workers on payroll, regardless of any local economic restrictions on your operations. SBA is continuing to work around the clock to forgive existing PPP loans and implement the next phase of this vital Program,” Carranza said.