A new round of paycheck protection program money will begin to be available to some lenders and borrowers on Monday, according to senior administration officials.
Community financial institutions – around 10% of eligible lenders – will be able to start accepting loan applications on Monday for entities seeking their first PPP loans. Those same lenders may begin processing second-round loans for small businesses and nonprofits that have already used up their first loan on Wednesday, officials said on a call with reporters on Friday. The loan 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 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 observed during the first round of spring. The program ran out of money within days as companies rushed to claim the funds with few eligibility restrictions. Many very small businesses without a strong connection to a lender were left out of the process and unable to obtain financing.
“These updated guidelines improve targeted PPP relief for small businesses most affected by COVID-19,” Treasury Secretary Steven T. Mnuchin said in a statement Friday. “We are committed to quickly implementing this cycle of PPP to continue supporting American small businesses and their workers. “
Officials said they did not anticipate the system would be inundated with demands this time around and that the $ 284 billion Congress approved for this cycle 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.
Changes to eligibility
The new prize pool sets aside $ 60 billion for businesses that haven’t yet been able to access the process, and focuses on businesses with 10 or fewer employees or those located in low-income areas. The initiative also has $ 30 billion to help build the capacity of lenders active in underserved areas, including community development finance institutions, insights from minority custodians and other small lenders.
Companies eligible for a second loan will be capped at 300 employees, down from 500 previously, and the maximum loan amount this time is $ 2 million, up from $ 10 million. Applicants must also prove that income 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 loan applicants simply need to certify that they meet income reduction requirements at the time they apply for a loan and provide documentation of lost income. at a later date. The loan cancellation process is also simplified.
Eligibility rules are also more flexible in this round. Housing co-ops, direct marketing organizations and 501 (c) (6) organizations, such as chambers of commerce and professional associations, are eligible to apply. PPP loans can be used to cover more expenses including operating expenses, property damage costs, vendor costs, and personal protective equipment for employees.
The influx of cash comes at a critical time, with more than 60% of companies believing that the worst of the pandemic-related economic crisis is yet to come, according to a recent poll of 600 small business owners by the US Chamber of Commerce and insurer MetLife Inc. About half of survey respondents said they will have to close within a year, unless the economy does not improve.