Hard-hit small businesses that did not participate in the first round of the Paycheck Protection Program (P3) have another chance starting this week. The US Small Business Administration and the US Treasury Department said friday that they will reopen the program today, starting the $ 284 billion distribution process that was included in the spending and relief measures promulgated on December 28.
The first PPP provided $ 525 billion in forgivable loans under the CARES law spent shortly after COVID-19 rocked the job market. The SBA stopped receiving requests in August after funds ran out.
First draw and second draw loans included
This time around, the program includes first-draw PPP loans and second-draw PPP loans, the latter of which are available to borrowers who meet the rules of keeping people in employment, a key requirement for forgiving loans.
The relaunched program includes $ 35 billion for these first-draw PPP loans and $ 15 billion specifically earmarked for community financial institutions.
This is in response to criticism that a disproportionate amount of lending activity – which generated millions in fee income – has gone to larger lenders and a disproportionate amount of loans has gone to large corporations and not enough for businesses belonging to minorities and areas in difficulty.
Small lenders need to start, but they asked for a delay
This time around, the SBA and the Treasury say that only community-based financial institutions can make first-draw PPP loans from today and second-draw PPP loans from Wednesday. “The PPP will open to all participating lenders shortly thereafter,” said Friday’s announcement.
But there could be a catch. the first wave of PPP loans was a constraint on lenders large and small, and the Community Development Bankers Association (CDBA) called for the rollout to be delayed to give small financial institutions with small staff time to prepare.
“How are we going to do this?” CCAA CEO Jeannine Jacobes says Politico. “For most of these people, they have to put everything in place. They have to train their staff. It’s not about turning on the lights. People have to know what they’re supposed to do.”
Some things have changed and some not for this tour
The SBA just released application forms and other information for lenders on Friday. Businesses – including agencies, business developers and other stakeholders in the property investment space – who has already obtained a PPP loan can get a second one if they have no more than 300 employees, will use or have used the total amount only for authorized purposes and can demonstrate a reduction of at least 25% gross revenue between comparable quarters in 2019 and 2020.
Other types of organizations are also eligible this time around, including housing co-ops, and some borrowers may be able to change their PPP First Draw loan amount. Changes have also been made to the period covered by the loans.
Here is a list of guidelines the SBA has released on the new PPP program:
Millionacres net profit
As the pandemic progresses, millions of American jobs and businesses remain at risk, and hundreds of thousands of businesses have already gone bankrupt: 110,000 restaurants alone, according to the National Restaurant Association.
In Friday’s press release, Treasury Secretary Steven Mnuchin said: “The Paycheck Protection Program has successfully granted 5.2 million loans worth $ 525 billion to small businesses in the United States, supporting more than 51 million jobs “.
Rapid deployment, which hopefully builds on lessons learned from the first wave of PPP loans, can go a long way to help small businesses and the livelihoods that directly depend on them, as well as the millions of investors who have participation in all of this, either through direct ownership or through the stock market.