Community lenders will benefit from the first 2 days of PPP 2.0 for themselves
The Small Business Administration (SBA) plans to give community lenders – such as community development financial institutions, minority depositories, and certified development corporations – exclusive access to the Paycheck Protection Program (PPP) portal. ) for at least the first two days after reopens Monday, according to new orientation the agency published.
These lenders will be able to accept applications from businesses seeking their first PPP loans on Monday. The same institutions can accept documents from PPP borrowers for the second time on Wednesday, senior administration officials said, according to Bloomberg and the Wall Street Journal. Other eligible lenders will be able to accept applications soon after.
Applications will go through a series of automated checks before a loan number is issued, officials said. This could slow down processing time by about a day, they said, but should reduce confusion and potential fraud, they said.
“These updated guidelines improve targeted PPP relief for small businesses most affected by COVID-19,” Treasury Secretary Steven Mnuchin said on Friday in a statement seen by Bloomberg. “We are committed to quickly implementing this cycle of PPP to continue supporting American small businesses and their workers. “
The SBA said it plans to connect borrowers, through its online lender matching tool, to “small lenders who can help traditionally underserved communities,” adding that some hours will be spent helping “smaller ones. PPP lenders “to access the portal.
The agency also added an optional demographic reporting section to its PPP application in hopes that lenders will encourage borrowers to complete it and step up “efforts to reach underserved, minority-owned, veteran businesses. and to women “.
The orientations of the SBA were awaited. Congress asked the agency to establish ground rules within 10 days of the president signing the stimulus bill that provided $ 284 billion for a renewed PPP. The program, in its first iteration between April and August, provided $ 525 billion in forgivable loans to small businesses.
The second round of funding has more stringent criteria. First, $ 15 billion should be set aside for lenders with assets under $ 1 billion and an additional $ 15 billion for those with assets under $ 10 billion. Additionally, this P3 cycle restricted eligibility to small businesses – those with up to 300 employees, from the undergraduate cap of 500 – and lowered the maximum threshold for new loans to $ 2 million. against $ 10 million. Applicants must also show a 25% drop in revenue in any quarter in 2020 compared to the same quarter in the previous year.
The SBA, through an interim final rule, also removed a previous 5% cap on lender fees for loans under $ 50,000 in an effort to encourage lenders to work with small borrowers. .