$130B Remains in Paycheck Protection Fund

YOUNGSTOWN, Ohio – A week into the second round of the Paycheck Protection Program, $130 billion remains in the fund, says Small Business Administration regional director Rob Scott.

As the new round launched April 27, some industry analysts warned that as banks worked through their leftover applications from the previous round, the allocated $310 billion would be exhausted by the end of that week.

But, Scott says, the administration has seen the average loan size drop to $76,000 from the first-round average of $206,000, while also disbursing money to more businesses.

“We’re not going through the funds as fast, but we’re reaching more businesses. And because they’re lower loan amounts, the money is going farther. We all thought it’d go a lot faster, but I don’t think we looked at the size of the loans,” Scott says, noting that he expects funding to last about another week.

In Ohio, as of May 1, 118,634 businesses had been approved for $4.71 billion via Round Two of PPP funding. For comparison, Round One saw 59,800 approved for $14.11 billion. Across the five-state region Scott oversees, $22.79 billion has been approved for 307,913 businesses. The region ranks first in the number of applications approved and second in dollars, he notes.

To the best knowledge of the SBA, he says, all banks have worked through their backlog of applications as of Tuesday.

“For those that are in the queue for PPP loans, I’d recommend they get in touch with their lender and confirm that they have everything that lender needs in order to get it into our system. As of right now, from everything we’ve been told, there are no lenders that have a waiting line,” Scott says. “We have been able to process all those batch files. It’s all gone through our system, so every lender should be able to access our system and in real time enter in their customers’ applications.”

On April 29, the SBA provided an eight-hour window of exclusive access for financial institutions with less than $1 billion in assets, part of an effort to ensure banks of all sizes had a level playing field. While two local banks that fit the criterion didn’t need to use the system – both Cortland Bank and Mercer County State Bank said they had submitted all applications on hand before the exclusive window opening that day – Scott says it was a crucial part of making sure all businesses had a chance to access funds.

“The smaller lenders are the ones that are doing better and [doing] more applications than the larger institutions because they’re in the community, helping the mom-and-pops and rural America,” he says.

In Round Two, a total of $60 billion was allocated for banks with less than $50 billion in assets. In total, $50 billion of that has been approved, with banks under $10 billion in assets using the full $30 billion set aside for them and now drawing from the second $30 billion pool.

For businesses that have already received their funds from the Paycheck Protection Program, Scott says more guidance will be coming soon on how the loans can be forgiven. On Monday, the administration issued its first answers on the topic to its continually updated FAQ page. 

The answers address issues such as employees who don’t return to the business where they were previously employed. Such cases will not affect the forgiven amount. In the document, which can be read here, the SBA says employers must make good faith efforts to bring employees back on the payroll.

“This is a first step in providing that. When the legislation was passed, we couldn’t envision everything, so we’re issuing those FAQs and guidances to put more meat on the bones,” Scott says.

He adds that whether or not businesses reopen will not affect loan forgiveness, as the goal of the program is to keep workers employed, not reopen businesses. Employees only need to be on payroll for the loan to be forgiven.

“It is immaterial whether or not that business can open their doors or at what capacity. All of this is to keep people on payroll,” Scott says. “I understand that some businesses won’t be able to reopen or be at half capacity, but the goal of the legislation is to keep people paid. What we’ll be doing, with additional guidance when it comes to forgiveness, hopefully is taking that into account.”

Should the need arise for a third round of funding, Scott expects it to be approved, though such discussions are speculative at this point.

“The president has said if there’s a need, he’ll advocate for it. Congressional leaders have said the same thing. The great thing about small business is that it’s not a partisan issue,” he says. “If there’s a need for Round Three of PPP, I’m sure Congress, with the support of the president, will definitely get it.”

Copyright 2022 The Business Journal, Youngstown, Ohio.