Community financial institutions get dedicated access
The U.S. Small Business Administration, in consultation with the U.S. Treasury Department, reopened the Paycheck Protection Program (PPP) loan portal Monday morning. SBA is continuing its “dedicated commitment to underserved small businesses” and to addressing potential access to capital barriers by initially granting PPP access exclusively to community financial institutions (CFIs) that typically serve these concerns.
When the PPP loan portal reopened today, it initially accepted first-draw PPP loan applications from participating CFIs, which include community development financial Institutions (CDFIs), minority depository institutions (MDIs), certified development companies (CDCs) and microloan intermediaries. These lenders made up approximately 10% of all PPP participating lenders in 2020. A first-draw PPP loan is for those borrowers who have yet to receive a PPP loan before the program closed in August 2020.
On Wednesday, Jan. 13, participating CFIs may begin submitting application information to SBA for second-draw PPP loans. That is for certain eligible borrowers that previously received a PPP loan, generally have 300 employees or less, and has suffered a 25% reduction in gross receipts. At least $15 billion is set aside for additional PPP lending by CFIs.
A few days later, additional lenders will be able to submit first- and second-draw PPP loan applications. SBA will continue to provide updates on systems operations during the week of Jan. 11. Additionally, SBA plans to dedicate specific times to process and assist the smallest PPP lenders with loan applications from eligible small businesses.
The opening of the SBA loan system is designed to efficiently and effectively implement the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and to ensure increased access to the PPP for minority-, underserved-, veteran- and women-owned small business concerns. SBA also is calling upon its lending partners to redouble their efforts to assist eligible borrowers in underserved and disadvantaged communities.
Updated PPP lender forms, guidance and resources are available at www.sba.gov/ppp.
SBA Extends ‘Crucial Lifeline’ to Borrowers Impacted by COVID-19 with Debt Relief
As the U.S. Small Business Administration continues implementation of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, signed into law by President Donald Trump on Dec. 27, SBA Administrator Jovita Carranza made the following statement in regard to Section 325:
“Small business is big business in America, and this administration will continue to extend a lifeline to small business owners during this critical time. Congress charged the SBA with making debt relief payments (principal, interest and fee payments) under Section 1112 of the CARES Act to help borrowers in SBA’s 7(a), 504 and microloan programs; and now SBA is working expeditiously to implement the newly enacted assistance.
“The new law extends SBA debt relief authority, allowing the administration to continue alleviating adverse economic effects of COVID-19 for small businesses with SBA loans. Since April last year, the SBA has made over $7.1 billion in payments across 1,819,130 loans on behalf of these borrowers. It’s important to note that these firms were also initially able to access capital because of the SBA federal guarantee.”
The SBA is determining how much additional debt relief assistance can be provided to SBA borrowers with the newly issued congressional appropriation. Debt relief guidance will soon be posted on the SBA website.