As PPP gears up for Monday restart, here's what you need to know
The U.S. Small Business Administration’s Paycheck Protection Program returns Monday with a $310 billion infusion, and there's an anticipated surge of small businesses expected to all go after the limited pool of funding.
Passed by the House of Representatives late Thursday, the $484 billion package, of which PPP is the biggest component, needs President Donald Trump’s signature, expected on Friday, but that doesn’t mean open sesame for the SBA’s application portal as SBA works on guidance and details.
But there are differences this time from PPP’s initial launch on April 3. The original $349 billion allotment ran out in two weeks; funding for SBA’s Economic Injury Disaster Loan program and advances was also exhausted. EIDL is to receive another $50 billion through the new legislation. PPP loans are meant to pay employees and overhead and are forgivable.
Kelly Hunt, district director for SBA’s Western Pennsylvania District, which is based in Pittsburgh and covers 27 counties, provided some insight about some changes expected to make the process more accessible to borrowers desperate for help.
“We have online small business lenders like Paypal and Intuit that are also taking PPP applications,” Hunt said. “This came about at the end of the first round of funding and, for a lot of borrowers, that’s new for them. If people have banks that aren’t participating or not getting the service they need from their bank, they can go to an online lender.”
The new legislation also aims to level the paying field by setting aside funds for very small, localized lenders who serve specialized communities, she said.
“This is to make sure we’re getting money to the people who need it most, including minority and rural business owners,” Hunt said. “We expect to see an emphasis on agricultural enterprises. Not necessarily farmers, but any type of agricultural business with less than 500 employees will be able to receive EIDL loans and advances. We have significant dairy farms in our area who have been badly hurt. We’re gearing up in our office to better reach these businesses, and the SBA has some guidance to make it happen.”
More lending options are crucial. Borrowers can go to lenders outside the Pittsburgh region. Many, inside and outside western Pennsylvania, prioritized their clients, but many of them still wound up in limbo when the $349 billion ran out. There were no guarantees by the size of the bank: JPMorgan Chase & Co. was the biggest PPP lender in the country during the first round, distributing more than $14 billion, but Jen Roberts, CEO of Business Banking, posted on Thursday night that Chase (NYSE:JPM) has such a large queue of pre-existing applications that it will work through those first and is concerned that funds could run out again quickly.
“At this time, we are not taking new applications.” Roberts said. She added that Chase will keep monitoring the funding available and may consider accepting new applications at some point.
“We’re all scrambling to take care of as many customers as we can,” said Michael Price, CEO of First Commonwealth Financial Corp. and chairman of the Pennsylvania Bankers Association. “The demand is greater than the supply. It’s that simple.”
First Commonwealth (NYSE:FCF) redoubled its efforts to serve clients in the first round, “and we’ve redoubled them again,” Price said. “We have an experienced SBA team and we marshaled several hundred employees to do as many PPP loans as we can.”
What happens over the weekend depends on the banks, said Christopher Hatch, communications director for the SBA’s Mid-Atlantic Region, which includes the Pittsburgh area.
“Some have been holding onto applications since the appropriations ended in the expectation of additional funding,” Hatch said. “Borrowers should check with their lending institutions on the status of (or) plans for their applications.”
Jim Dionise, president and CEO of six-branch Mars Bank, hadn’t done an SBA loan in years. Among 19 Pittsburgh-area lenders that either returned to the fold or applied to participate for the first time in order to provide PPP loans to customers, Mars took “almost a week” to start making loans.
Now Dionise is ready to hit the ground running.
“We’ve added staff so we have more people to input information, and we’re going to have folks working nonstop until every application we have that’s been underwritten and approved gets into the system,” he said. “Clearly, two things are better for us. We have system access, and we’re familiar with the process. The first time, everyone was trying to figure out the program and as each day went by, there was more clarification and FAQs from the SBA on how it was supposed to work.”
Mars did not say how many applications it received or processed. But after PPP’s coffers ran dry on April 16, it continued to take applications and work with customers.
“They’re sitting and waiting for when the portals open,” Dionise said.
At this point, Mars has only taken applications from its existing loan and deposit customers.
“We’ve tried to be very transparent about where we are in the process and what our capacity is,” Dionise said. “In some cases, we tried to refer noncustomers to other institutions that we know are accepting applications beyond their customer base. It’s one thing to take the applications, underwrite them and validate them and get them ready for input, but you have a 10-day calendar window to generate all the documentation and get that in the hands of the customer and signed and funded. We looked at the capacity of the whole process and how many we could handle.”
The biggest question Hunt has received is not about PPP but centers on EIDL, which is administered directly by the SBA. Applicants want to know why they haven’t gotten a status report.
“If you got the screen that pops up and says your application was successful and gives you a loan number that starts with the number 3, you’re submitted,” Hunt said. “It’s the last screen and that’s the only correspondence you’ll get from the SBA until your EIDL loan is deposited in your bank account. There are millions of applications, and it’s not possible to follow up. After that, you’ll be contacted by a case manager who’ll work out the details. But there’s nothing anyone needs to do when the portal reopens.”
