Day 1 for SMEs with PPP2
Two weeks after being passed at the 11th hour by Congress, the second round of the Paycheck Protection Program (PPP) administered by the Small Business Administration began accepting applications for forgivable loans to help small and medium companies to weather the storm caused by the coronavirus.
At $ 284 billion, PPP2 is about half the size of the first round, but also includes $ 130 billion in unallocated funds, bringing the total funds to over $ 400 billion.
Under the new program, loans will now be capped at 2.5 times the monthly payroll or $ 2 million – down from $ 9 million – for companies with fewer than 300 employees who can prove they have suffered. loss of revenue of at least 25% in any quarter of 2020 compared to the same quarter in 2019. As a special incentive, hard-hit restaurants and other businesses in the hospitality industry can claim up to 3.5 times their monthly payroll.
“It is important to note that the vast majority of business owners and types of businesses are eligible,” including sole proprietorships and LLCs with dozens of employees, noted Steve Rabinovici, President of SBA Funding. “What is important is that all businesses affected by COVID-19 know that they have the option of accessing a 100% forgivable loan,” he added.
Some restrictions apply
Like any loan program, PPP2 has its own rules and application process that borrowers and lenders should be aware of, especially when failure to follow instructions can cost a business the opportunity to get its debt canceled.
After helping 100,000 businesses find loans from hundreds of lenders in the first round, the payment technology giant Fiserv said he plans to play a leading role in the second program as well, with the aim of offering a updated and streamlined platform which takes into account any adjustment.
“We are confident that the approach we are taking will simplify the task of applying for and granting a loan and bring relief to business owners, employees and communities as soon as possible,” said Todd Horvath, President of the Account Processing group at Fiserv.
The Wisconsin-based financial services company also said the automated online process was intuitive and logical and designed to ease the workflow for bankers and clients.
Hurry up, but don’t panic
While SBA Funding said first-time borrowers from community lenders will have first access to PPP2 on Monday (January 11), second-time borrowers will be allowed to start applying on Wednesday.
No mention was made as to how quickly the loans could be disbursed, but the loan packaging company said interested business owners should start their applications as soon as possible, as there was no reason to believe that the program would not be exhausted quickly.
In addition to the payroll, PPP2 loans can also be used to cover rent and mortgage interest, utilities, essential supplies and software, and safety and protection equipment and equipment. By design, the PPP2 program is only supposed to cover a few months of business operations, essentially waiting for time until the COVID vaccine can be released and the economy is able to stabilize.
Until then, according to PYMNTS data, small and medium-sized enterprises (SMEs) felt a little more confident about their chances of survival than they were at the start of the pandemic last March. Specifically, 54% of the SMEs surveyed said they expected to be present in the summer 2022 at the end of the year, compared to 48% who believed so six months earlier.