Starting Monday, Jan. 11, small businesses which did not get a Paycheck Protection Program (PPP) loan the first time around can get to the front of the line for the new $248 billion round of funding. That jump start is meant to target the smallest businesses in hard-hit communities, as well as minority-owned businesses.
For the first two days of the new program, only community lenders will be allowed to process new PPP loans. Dave Glaser is CEO of Mofi, a community development financial institution based in Montana, which serves Idaho.
“What that will allow,”Glaser explained, “is for us to move faster as a CDFI because there won't be other institutions trying to work with the SBA's portal.”
Mofi processed about 1,300 PPP loans in the first round, 600 in Idaho. Glaser said they’ll be busier in round two.
“We anticipate, based right now on the people who have reached out to Mofi, that we're going to be looking at about a 1,000 loans next week already.”
More types of businesses and expenses qualify for PPP loans, which become grants if the funds are used correctly. After the two-day head start for businesses which didn’t receive funding the first time, the new ‘second draw’ PPP funds will be open to all lenders and businesses with fewer than 300 employees starting Wednesday.
To qualify, businesses need to show at least a 25% drop in revenue of any quarter between 2019 and 2020. Loans are capped at $2 million.
The initial $349 billion in PPP funding was exhausted in about two weeks. Congress then provided an additional $320 billion, which was not all used by the time the original program ended in August 2020.
Zion’s Bank issued nearly 2,400 PPP loans in Idaho last year. Executive Vice President for Marketing Rob Brough said this round of funding, while less than either of the first two allocations at $284 billion, may not run out as quickly as before.
“We really don't have an indication,” Brough said. “I think that we would expect what we'll see this round are smaller deals, smaller loans.”
Mofi’s Glaser expects the same, as more small businesses and sole proprietors line up for sorely needed help. He says they’re ready, and the program is more fine-tuned now than it was last spring.
“The second round of PPP is definitely more favorable,” Glaser said. “There were lessons learned in the first round and it's going to be easier to use this time.”
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