The U.S. Small Business Administration (SBAS) is determined to get critical funds to the smallest of small businesses through the Paycheck Protection Program. The Agency began accepting applications for the newest round of funding on Monday, April 27. In 24 hours, SBA approved 475,000 loans for $52 billion dollars, more than seven times the number of loans the Agency normally processes during an entire year, and nearly twice the dollar amount.
On April 29, beginning at 4 p.m. Eastern Standard Time through midnight, SBA systems only accepted loan applications from lenders with asset sizes less than $1 billion dollars.
We know many of our smallest small businesses rely on community lenders for their banking needs. To ensure access to the PPP loan program for the smallest lenders and their small business customers, we are limiting access to the loan application portal. After midnight, these smaller lending institutions will be able to submit PPP loans outside of this time frame.
The first 24 hours the money became available, the SBA approved $28 billion from banks with assets less than $10 billion. This represents about 60 percent of the total amount approved the first 24 hours.
The CAREs Act second round of funding dedicated a $30 billion pot of money exclusively for small banks. Because these funds were exhausted early, the agency stepped in to ensure small banks and their small business customers were able to get a piece of the pie.
As the small banks continue to submit applications, the money will be pulled out of the larger pot of money available for all banks. Despite the challenges smaller banks are facing, they are leading the way in this second round.
Additionally, the SBA and the Department of Treasury noted the large number of companies have appropriately reevaluated their need for PPP loans and promptly repaid more than $2 billion in loan funds in response to updated SBA guidance, reminding all borrowers of an important certification required to obtain a PPP loan.
To further ensure PPP loans are limited to eligible borrowers, the SBA has decided, in consultation with the Department of Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Regulatory guidance implementing this procedure will be forthcoming.
Although the reserved processing time for small banks applies April 29, the SBA and Treasury will evaluate whether to create a similar reserved time again in the future.
The SBA and Treasury continue to monitor loan system performance and will continue to provide frequent updates to the lending community.
The SBA is surging about 3,500 additional temporary personnel to support the Agency’s important workload. If you are interested, visit https:// www.sba.gov/page/disaster-response-jobs-sba for information.
For additional resources, small business owners should to visit www.sba.gov/coronavirus, and please remember to follow us @SBAsouthcentral.
Justin Crossie is the regional administrator of the U.S. Small Business Administration’s SouthCentral Region VI, serving, Louisiana, Arkansas, Texas, Oklahoma and New Mexico.