- Revived Paycheck Protection Program (PPP)off to smoother and slower start than its springtime original relief loans to small businesses
- Program opened last week with applications from all lenders
- In first week, 60,000 applications approved for some $5B
One of the most popular programs within the massive CARES Act passed last spring in response to the COVID pandemic was the Paycheck Protection Program (PPP)that offered relief loans to small businesses negatively impacted by the pandemic. The revived PPP was back and off to a smoother and slower start as of the first week of January.
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Managed by the Small Business Administration with borrowers applying for loans via their lenders, some 60,000 PPP applications were approved from nearly 3,000 lenders during the first week. This time, the PPP program gave a two-day head start to a small subset of community lenders and tiny banks to better serve minority business owners. Now, all lenders/banks, large and small, approved loans for an approximate total of $5B. This $5B represents about 2% of the $284B the program has available to lend.
This time around, the government’s computer systems were not overwhelmed. And this time around, new fraud checks, along with other safeguards, were in place. The result? Most PPP applications will take at least a day to gain approval.
Eligible applicants for the revived PPP include first-time borrowers and some returning borrowers who were offered aid during the first program operation. The returning borrowers will be among the hardest-hit small businesses that have experienced a drop in sales of at least -25% since the pandemic’s onset.
Many lenders have been preparing for significant demand from both first- and second-time borrowers. John Asbury, chief executive with Atlantic Union Bankin Richmond VA, is anticipating at least 60% of his bank’s 11,000 borrowers to return for a second PPP loan. Asbury told The New York Times,“We simply don’t know how much of a rush we’re going to get. We’re getting a lot of calls.
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As it states in its name, at least 60% of the total PPP loan package going to small businesses must go to paying employees salaries. These relief loans may become grants if the small business owner complies with the rules specified within the loan itself.
Applications for the PPP are being taken through March31, 2021. Treasury Departmentofficials anticipated that the $284B in the program’s funding will be enough to fulfill all loan requests.
Thanks to The New York Times.
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