New round of funding may be available through Payroll Protection Program
By Lou Sorendo
While the powers in Washington look to replenish the COVID-19-inspired Paycheck Protection Program overseen by the U.S. Small Business Administration, there has yet to be any indication as to who received funds in Oswego and Onondaga counties during the previous round.
The White House and Congress reached a deal on a new funding package Tuesday that will replenish a lending program meant to aid small businesses hurt by COVID-19.
The Senate and House will need to pass the legislation later this week.
The deal totals more than $480 billion and appropriates $320 billion for the PPP, $60 billion of which is targeted for small lenders and community financial institutions. This loan has a maturity of 2 years and an interest rate of 1%.
This emergency capital helps small businesses keep their workforce employed, providing workers with their paychecks during the COVID-19 public health crisis, according to the SBA.
The PPP is the single largest small business loan program in history, according to Matthew Coleman, regional communications director for the SBA’S District II based in New York City.
The PPP provides forgivable private capital loans for small businesses to keep workers employed. SBA will forgive the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities, he added.
“What the SBA is advising small businesses to do, if they haven’t already, is to contact their lender — either their bank, credit union or institution they have a financial relationship with — and ask if they’re participating in the PPP. If so, they can work to get their PPP application ready for when the program restarts after additional appropriations,” he said.
“If their local lender doesn’t participate in the program, the SBA has an online Lender Locator tool available that identifies lending partners who meet eligibility requirements. Enter your zip code, and begin your search,” he added.
The SBA recently processed more than 14 years’ worth of loans in less than 14 days, Coleman said.
The PPP, authorized by the bipartisan CARES Act, is saving millions of jobs and helping America’s small businesses make it through this challenging time, Coleman noted.
The program allows small businesses to keep workers on the payroll and in some cases has aided owners from going under completely amid the downturn, according to the SBA. Social distancing measures and stay-at-home orders in some states meant to slow the spread of the virus have hit small-business owners particularly hard, it added.
By law, the SBA cannot issue new loan approvals once the programs experience a lapse in appropriations. Congress originally funded the PPP at $349 billion through the CARES Act. PPP ran out of funds to lend to small businesses last week.
Ready for next round
When Congress appropriates more federal funding, the SBA will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks, according to the SBA.
In terms of a timeline and expectations on new funding, Coleman could not comment.
As an executive branch agency, the SBA is prohibited from commenting on pending legislation until it passes both houses of Congress and is signed into law by the president.
While the SBA recently approved more than 1.6 million loans in less than two weeks, specific, detailed data for each is not available right now, Coleman said.
SBA intends to post individual loan data in accordance with information presently on the SBA.gov website after the loan process has been completed.
The SBA has made available the questions the agency requires for the loan at https://www.sba.gov/document/sba-form–paycheck-protection-program-borrower-application-form so that small business owners and entrepreneurs can get their paperwork together before approaching a lender participating in the program. If additional information is requested, it is a requirement placed by an individual bank or lender.
In New York state, more than 81,000 PPP loans have been approved amounting to more than $20.3 million through April 16. The average overall loan size is $206,000.
Industries receiving the most funds to date include construction; professional, scientific and technical services; manufacturing; and health care and social assistance.
The PPP has not been administered without controversy.
According to Reuters, more than 25% of the $350 billion in the previous round went to fewer than 2% of the firms that got relief. They include a number of publicly traded companies with thousands of employees and hundreds of millions of dollars in annual sales, according to Reuters.
The loans from the SBA went to companies in all 50 states, the District of Columbia and five U.S. territories, and were spread across all 20 of the main industry sectors.
Congress directed the SBA to award funds to struggling businesses with 500 or fewer workers as part of a $2.3 trillion COVID-19 aid package that Trump signed into law on March 27.
The three biggest state economies — California, Texas and New York — accounted for 23% of the loans, more than $82 billion, according to Reuters.
Meanwhile, businesses in a number of small, rural states that have avoided the brunt of the outbreak took home a disproportionate share of the pie, Reuters reported.