Smaller lenders to get first crack at new PPP loans
Community-level financial institutions will get a head start on providing small-business relief loans in the latest iteration of the Paycheck Protection Program (PPP).
The new round of PPP loans will kick off on Monday.
The previous PPP round, which offered forgivable loans to struggling small businesses during the pandemic-induced recession, was heavily criticized as big banks and well-connected businesses snatched up many of the loans.
Smaller businesses, particularly minority-owned ones, had more trouble accessing the crucial funds as community financial institutions struggled to set up online portals and processes for obtaining the loans.
The new round will allow community financial institutions to give first time loans starting Monday and second loans for previous PPP recipients starting Wednesday. The program will be accessible to other lenders “shortly thereafter,” according to a joint statement from the Treasury Department and Small Business Administration.
“The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” Treasury Secretary Steven Mnuchin said.
“This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19.”
The $248 billion round approved in December’s COVID-19 relief bill will also be more limited in nature, targeting smaller businesses than the first round.
To be eligible for a second round of loans, businesses must have fewer than 300 employees and show a 25 percent drop in gross receipts in any given quarter of 2020 relative to the same quarter in 2019.
The last day to apply for a loan will be March 31.