Other small business loans are in progress. Here’s what you need to know
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The Loan Program – which the Small Business Administration had to close on April 16 when the first tranche of $349 billion dried up in less than two weeks — will reopen at 10:30 a.m. Monday, according to a statement from U.S. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza.
The loans, part of the government’s coronavirus relief package, do not have to be repaid if used immediately to cover pre-crisis wage expenses..
Here’s what you need to know:
I have already applied. Should I apply again?
You shouldn’t have to if the lender you worked with processed your loan application. In some cases, the bank may even have it ready to send for final approval to the SBA.
“The majority of banks continued to process applications after PPP funds ran out in anticipation of additional funding. Once the SBA reopens the program, these pending applications should be processed in the order in which they were approved by the bank,” a Consumer Bankers Association spokesperson said.
Although it can be tricky to get through, try checking with your loan provider to see if there’s anything more you need to do to speed up the process.
What is the probability that I receive money during this second round?
It is unlikely that you have already applied. The problem is that there is a huge backlog of applications that were not approved before the first round of funding ran out.
Estimates of the number of people already in the queue range from 1 million to a few million. Moreover, even after the PPP shut down on April 16, many lenders continued to accept new applications on the assumption that Congress would add more money to the pot.
During the first round of lending, 1.66 million applications were approved, according to the SBA. A roughly similar number can be approved in the second round.
“We already believe that the pending requests exceed the newly allocated funds. So there is going to be a shortfall requiring additional credit,” Jaret Seiberg, an analyst at Cowen Washington Research Group, said in a note to clients.
There will likely be continued pressure on lawmakers to do more to help small businesses.
I haven’t applied yet. Should I even bother?
Seiberg estimates that pre-existing apps could “consume all new funds by the end of the week.” So the new apps might not make the cut this time. But applying anyway can be worthwhile for several reasons.
First, there’s still a chance lawmakers will approve a third round of funding in the coming weeks and you’d be in line for that.
Second, if you are a very small business, especially in an underserved area, such as a low- or middle-income neighborhood or rural community, you might consider applying to a designated lender like Community Development Financial Institution or a small local community bank or credit union with assets of less than $10 billion.
Indeed, $30 billion of new PPP funding is earmarked for these smaller lending institutions. Even these lenders – who were very active in the first funding round – may have long queues of existing applicants. But it may be worth it if you can file before Monday, said Gwendy Brown, vice president of research and policy at Opportunity Fund, a nonprofit lender for small businesses.
And third, even if those lenders can’t get you financing this time around, the more small businesses that apply, the more it will demonstrate to lawmakers how much support will be needed to help small businesses survive, a Brown said. “It’s about quantifying the need.”
(Here is SBA’s list of approved lenders for PPP.)
Will SOEs still get PPP loans?
There was outrage that some state-owned companies got loans – over 175 of them, according to a CNN Business analysis.
Some have said they will return the money and others may in light of new Treasury guidelines, which reiterated the obligation of public companies to certify in good faith that they need the money and cautioned that they should be prepared to demonstrate this need upon request. of the SBA.
Translation: if you don’t need it, don’t apply. And if you already have a loan, repay it if not.
“The SBA and the Treasury are effectively threatening to bring fraud charges against publicly traded companies that have received Paycheck loans. … We believe this will force the majority of publicly traded companies that received Paycheck Protection forgivable loans to return the money by May 7,” Seiberg said.
It is still not officially known what will happen to the returned money, as there are technical issues that need to be resolved. But in a Tweeter On Friday morning, Sen. Marco Rubio, chairman of the Senate Small Business Committee, said the money refunded “will be added to whatever Congress has appropriated” for the loan program.
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