Minority-owned and women-owned businesses get first offer on new PPP loans
Community lenders serving minority and women-owned businesses will have exclusive access to a new pot of Paycheck Protection Program loans for at least two days when the next installment of money becomes available, according to the reports. new rules for the Small Businesses Administration.
The SBA did not say when this next round of loans would open. The guidelines, released Wednesday night, say the SBA will work to ensure underserved businesses can benefit from the latest round of funding, including matching loan applications to small lenders, devoting hours to helping small ones. participants in P3s and to secure more funding for community development. institutions to register as PPP lenders.
The guide seeks to address several criticisms of early rounds of PPP funding: largely that vulnerable small businesses were unable to get help because large businesses claimed the funds before small businesses could access them. . The program had previously encouraged banks to prioritize large loans over small ones.
Congress approved an additional $ 284 billion for forgivable small business loans in December. The plan includes anti-fraud measures and other measures that advocates say will give some of the most vulnerable employers a better chance of getting help.
The new prize pool sets aside $ 60 billion for businesses largely excluded from the process so far, and it focuses on businesses with 10 or fewer employees or those located in low-income areas. The initiative also has $ 30 billion to help build the capacity of lenders active in underserved areas, including community development finance institutions, insights from minority custodians and other small lenders.
The renewal of the paycheck protection program included in the Covid-19 relief plan that was passed by Congress in December is in addition to the $ 660 billion that has already been allocated to forgivable loans. At least millions of dollars of previous aid has gone to fraudulent applicants, according to public and private estimates.
With the new money, businesses will be able to apply for a second loan, but there are stricter rules. Companies can have a maximum of 300 employees, compared to 500 previously, and the maximum loan amount this time is $ 2 million, compared to $ 10 million. Applicants must also prove that income has decreased by at least 25% during a quarter in 2020 compared to the previous year.
The SBA guidelines detail how businesses can calculate their 25% loss of income – using gross revenue as a measure – to see if they are eligible for a second loan.
The SBA said in the guidelines that applicants must have used the full amount of their first PPP loan by the due date of the second PPP loan.