After a previous successful deployment of the Paycheck Protection Program, the Small Business Administration reactivated the program Monday.
Banks in the Lakelands have welcomed the reopening of the program with open arms.
“I would say we are excited to be participating in the PPP program again and are waiting on guidance from the SBA on when they will allow mid-size banks like First Citizens Bank to begin processing the applications,” Jerry Stevens, market president for First Citizens Bank, said in an email.
The program has two components: first draw loans and second draw loans. Previous participants in the PPP can apply for second draw loans. Second draw loans became available to some lenders Wednesday.
“To promote access for smaller lenders and their customers, SBA will initially only accept second draw PPP loan applications from participating community financial institutions,” a page on the PPP website said.
The website also said $25 billion is set aside for second draw PPP loans to eligible borrowers with a maximum of 10 employees or loans of $250,000 or less to low- or moderate-income neighborhoods.
“The preliminary PPP2 application looks as though it allows for loans to businesses with less than 300 employees and there will be a larger loan amount for accommodations and restaurant business,” Stevens said. “I think we would all agree they have been more negatively impacted with reduced revenues from comparable quarters.”
To be eligible for second draw PPP loans, the business needs to: have received a first draw PPP loan and used it for only authorized uses, has no more than 300 employees and can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
The maximum loan amount is calculated at 2.5 times the average monthly payroll costs from 2019 or 2020. For accommodation and food service businesses, the maximum loan is 3.5 times the average monthly payroll costs. The loans are capped at $2 million.
For small businesses that did not participate in the initial PPP, first draw loans are available again.
Many banks reported success in getting loans forgiven from previous installments of the PPP.
“We feel the PPP has been successful to date, and we have had success with loan forgiveness,” Jamie Compton, communications director for Countybank, said in an email. “We have processed around $20-25 million loans for the Greenwood market.”
The SBA, which administers the program, boasts of many loans in the program being forgiven.
“The SBA has so far received 1,346,125 forgiveness applications for approximately $170.5 billion,” a Tuesday press release from the SBA said. “SBA has made payment on nearly 85% of the applications, forgiving over $100 billion.”
While he would not give specifics for the Greenwood market, Stevens said First Citizens Bank assisted with more than 23,000 PPP loans for an amount in excess of $3.2 billion.
The application period will remain open until March 31.