SBA Reopens PPP for Small Banks Friday, All Lenders Jan. 19

YOUNGSTOWN, Ohio – The Small Business Administration will reopen its Paycheck Protection Program portal to small lenders Friday, followed by all participating institutions on Tuesday.

Starting Friday at 9 a.m., lenders with less than $1 billion in assets will be able to submit applications for first- and second-draw borrowers. Nationally, that includes more than 5,000 community banks, credit unions and farm credit institutions; locally, the list includes Cortland Bank, Greenville Savings Bank, Cardinal Credit Union and Mercer County State Bank.

At 9 a.m. Jan. 19, all lenders regardless of size will be able to submit applications.

“A second round of PPP could not have come at a better time, and the SBA is making every effort to ensure small businesses have the emergency financial support they need to continuing weathering this time of uncertainty,” said SBA administrator Jovita Carranza in a statement. “SBA has worked expeditiously to ensure our policies and systems are re-launched so that this vital small business aid helps communities hardest hit by the pandemic.”

This week, the agency opened applications for community financial insitutiitions.

Borrowers who did not receive a Paycheck Protection loan through the first phase of funding – which closed Aug. 8 – are eligible for a loan up to $10 million. Second-draw borrowers can get up to $2 million, provided they employ 300 or fewer and can show a drop of at least 25% in gross receipt between comparable quarters in 2019 and 2020.

The new round of funding has $284 billion available, with set-asides for certain businesses and financial institutions to ensure funds go where it is most needed.

• $25 billion for second-time borrowers in low-income areas employing 10 or fewer requesting less than $250,000.
• $15 billion for community development financial institutions.
• $15 billion for small banks.
• $15 billion for first-time borrowers in low-income areas employing 10 or fewer requesting less than $250,000.
• $57 million for a SBA microloan program.
• $25 million for Minority Business Development Centers.

The new bill also includes a $15 billion grant fund for live entertainment venues, allowing such businesses to get up to $10 million each. However, businesses must choose between the grant or a PPP loan.

Sixty percent of PPP funds must be used on payroll, the same as the first round of the Paycheck Protection Program, but how the remaining 40% is used has been expanded to include operational expenditures such as software or accounting needs, supplier costs such as paying for orders made prior to receiving a PPP loan, worker protection such as protective equipment and repairing damages resulting from public disturbances in 2020 that are not covered by insurance.

The loan amount will still be calculated from 2½ times average payroll, except for businesses in food service and hospitality – those with a NAICS code starting with 72 – which can apply for 3½ times that amount. 

For more information on the details of the new round of the Paycheck Protection Program, watch The Business Journal’s webinar with HD Davis HERE.

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