For some community lenders, the last week has been spent processing new and secondary Paycheck Protection Program loans for small businesses.
For most banks and credit unions, the real crush is about to start.
“I’m expecting Tuesday to be extremely busy,” said Laurel Flynn, vice president of business lending at Achieva Credit Union in Dunedin. “Everybody’s very much excited that the program’s rolled out again. We have a lot of people that are eager to apply and get their applications going, especially for that second draw.”
After a days-long rollout among smaller lenders, the Small Business Administration’s pandemic relief loan program kicks into high gear on Jan. 19, when all participating lenders can begin taking applications for $284.5 billion in federally backed loans.
After initially ending in August, the program returned as part of the government’s latest $900 billion coronavirus relief and stimulus package — this time with a few new rules prioritizing smaller businesses.
Through March 31, businesses with fewer than 300 employees can apply for loans that are forgivable if used for qualifying expenses such as payroll and utilities. Businesses that didn’t apply for a loan the first time around can apply for loans of up to $10 million; businesses seeking a second draw loan can apply for up to $2 million.
The process began Jan. 11 for community financial institutions, a class of lender that works with economically disadvantaged borrowers. On Friday, it opened for about 5,000 additional lenders with assets worth less than $1 billion. On Tuesday, every bank can join in.
Giving smaller lenders and businesses first crack at the funds is partly a response to the fact that the Small Business Administration didn’t prioritize them the last time.
“I do think it is going to work better for serving those small businesses,” Flynn said. “The SBA heard that loud and clear after the last go-around.”
Flynn said interest in this round of Paycheck Protection Program funding is just as high as it was last spring, with hundreds of her clients already calling about applications.
“We’ve probably had just under 100 applicants that are anxious to do a first draw,” she said. “Some people just didn’t think they qualified (last spring). Some people applied to various institutions, and maybe they didn’t have all the paperwork together, or they applied late, because they didn’t get their application handled in time, which is unfortunate. So they’re being a little bit more prepared this time when they’re applying and trying to get more ahead of the game.”
Since the initial run of loans ended in August, the Small Business Administration has clarified a lot about the program, including how small-loan recipients can be forgiven and whether the loans are tax deductible. (They are.)
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The break between application windows also gave lenders a chance to reevaluate their loan process. Achieva, for example, went from taking mostly in-person applications last spring and summer to a digital portal this time around, which Flynn said provides more transparency and user control.
“We’re using the same application that they’re using for forgiveness, which makes it really nice, because it’s like a one-stop shop for the member, for the applicant, because they can apply for forgiveness and the new round of PPP within the same application,” Flynn said.
The question Flynn has heard most often: If I don’t apply for a loan right away, is there a chance I won’t get any aid?
“There were funds left on the table when they closed out the PPP program from before,” she said. “I would say yes, there’s going to be funds available when this rolls out.”