(Bloomberg) – A new round of Paycheck Protection Program funds will begin to be available to select lenders and borrowers on Monday, according to senior administration officials.
Community financial institutions – about 10% of eligible lenders – will be able to start accepting loan applications on Monday for entities applying for their first PPP loans. On Wednesday, those same lenders can begin processing second-round loans for small businesses and nonprofits that have already used their first loan, officials said in a call with reporters Friday. The Lending Portal will be available to other eligible lenders and borrowers shortly thereafter.
Businesses may have to wait longer for their loan to be processed than they did in the spring. Applications will go through a series of automated checks before a loan number is issued. It could take about a day, officials said.
The exclusive availability of loans to community lenders for several days and additional identity checks aim to correct some of the confusion and fraud seen in the first round in the spring. The program ran out of money within days as businesses rushed to claim the funds with few eligibility restrictions. Many very small businesses without close ties to a lender have been left out of the process and unable to secure financing.
“These updated guidelines enhance PPP’s targeted assistance to small businesses hardest hit by COVID-19,” Treasury Secretary Steven Mnuchin said in a statement Friday. “We are committed to quickly implementing this P3 round to continue supporting America’s small businesses and their workers.”
Officials said they did not expect the system to be inundated with requests this time and that the $284 billion approved by Congress for this round would not run out.
Updated forms to apply for the loans are not yet available but are expected to be released soon, an official said.
The new pot of money sets aside $60 billion for businesses that have been unable to access the process so far, and it focuses on businesses with 10 or fewer employees or those in low-income areas. The initiative also has $30 billion to help build the capacity of lenders active in underserved areas, including community development financial institutions, minority depository institutions and other small lenders.
Businesses eligible for a second loan will be capped at 300 employees, up from 500 previously, and the maximum loan amount this time is $2 million, up from $10 million previously. Applicants must also show that revenues have decreased by at least 25% during a quarter of the pandemic, compared to the previous year.
The streamlined process for those applying for a loan of $150,000 or less means they only need to certify that they meet the income reduction requirements at the time they apply for a loan and provide documentation of the loss of income at a later date. The loan cancellation process is also simplified.
Eligibility rules are also looser in this round. Housing cooperatives, direct marketing organizations, and 501(c)(6) organizations, such as chambers of commerce and trade associations, are eligible to apply. PPP loans can be used to cover more expenses, including operating expenses, property damage costs, supplier costs, and personal protective equipment for employees.
The influx of cash is coming to a head, with more than 60% of businesses believing the worst of the pandemic-related economic crisis is yet to come, according to a recent survey of 600 small business owners by the Chamber. American trading company and insurer MetLife Inc. About half of survey respondents said they will have to close within a year unless the economy improves.
©2021 Bloomberg LP