Long Beach, California 2021-01-12 16:53:09 –
The long-awaited second round Federal Paycheck Protection Program (PPP) loan will be rolled out this week. The application will first be available through community financial institutions, a subset of banks, and other lenders that meet special criteria, and will soon be available to larger financial institutions.
In total, the Small and Medium Business Administration will provide $ 284.5 billion in loans to businesses, using accredited community development finance institutions (download the current list here), small lenders such as minorities and community finance institutions. $ 30 billion will be secured for applicants. Deposit handling agencies (download the list here), authorized developers, microloan brokers.
The application timeline is then categorized by the first borrower and company applying for additional PPP funds.
The loan application window opened on Monday for the first borrower to apply through a local financial institution, called the “first draw applicant” in SBA terminology. A total of $ 35 billion has been secured for the first-time beneficiary company.
For companies that have already received a loan through the program last year, but have since used up all their funds or by the time a new round of loans is disbursed, the application window will open on Wednesday, January 13th. Applicants for “Second Draw” must also apply through a local financial institution. It is unknown when the application process will be open to large banks.
Farmers & Merchants Bank, the local agency that processed the most loan applications in the first round of PPP loans last year, has to wait until companies can support their loans. However, despite delays in banks like Farmers & Merchants joining the process, Chief Credit Officer Phil Bond said this time he would support the phased adoption of the application.
“The stack approach is right,” Bond said. Regarding the opportunity for major banks to participate, Mr Bond said, “I hope it will happen fairly quickly.”
After loans to large companies were scrutinized at the time of initial payment, this time only companies with 500 or less employees are initially financed everywhere, except for media and food and hospitality companies. It becomes a target. .. Companies applying for a second round of funding under the program can have up to 300 employees and must present evidence of a loss of revenue of at least 25% year-on-year to qualify. .. Independent contractors and sole proprietors are also eligible.
In addition, there are limits to the amount a company can borrow under the program. The specific amount covered by each business is calculated based on salary costs and the food and hospitality business is eligible for additional funding, but the maximum loan amount for first-time borrowers is set at $ 10 million.
As with the first rendition of the program, 60% of the loan amount must be used for salary. But this time, the remaining 40% of the cost categories have been expanded to include worker protection such as personal protective equipment, looting and vandalism damage in 2020, and specialized services such as cloud computing. It came to be.
The interest rate on a PPP loan is 1% and you can be completely exempt from principal and interest as long as your spending requirements are met.