WASHINGTON–Round two of the Paycheck Protection Program begins today, with $60-billion in funds reserved for smaller institutions such as credit unions and CDFIs to distribute.
In a statement, the Small Business Administration said its processing system, E-Tran, will resume accepting PPP loan applications today at 10:30 a.m. ET from approved lenders.
A surge of applications is expected, and if the second round of PPP loans is anything like the first, it is expected to quickly exhaust the money available to help businesses make it through the coronavirus pandemic.
Congress last week approved another $310 billion for the program as part of a $484-billion package of stimulus. It follows the initial $349 billion that was included in the $2.2-trillion CARES Act and which provides loans that will be forgiven if the recipient company uses at least 75% of the money to cover payroll costs and maintain employee headcount.
The $60-billion reserved for smaller institutions and CDFIs is for those FIs of $10 billion in assets or less. Both credit union trade groups had advocated for the carve-out, especially after multiple reports indicted the biggest banks in the nation dominated the first round of applications with PPP requests on behalf of their customers.
According to the SBA, about 1.6 million businesses received funds in the first round of PPP loans. It isn’t known how many are left in the pipeline and how many more applications have since been filled out and submitted.
Many applicant businesses have also expressed worries over the uncertainty of where their applications might stand.
$77 Million Being Returned
Meanwhile, a number of large, public companies that received funds in the first round of PPP loans have announced they will return the money following significant criticism. Among them, Auto Nation, Inc., which said it will return $77-million it received. The company said it had planned to use the money to cover payroll costs for more than 7,000 employees. It was later learned Auto Nation had used separate tax identification numbers to apply for at least $266 million in funds for separate dealerships.
CUToday.info will have ongoing coverage and welcomes feedback from readers on their experiences in working with the PPP and SBA.