Now that the latest coronavirus-related stimulus package has been signed into law, the race is on once again for small businesses in search of relief. This time around, the federal government is providing an additional $370 billion for companies with fewer than 500 employees, and like last time, that money is expected to dry up fast. Here are some of the latest details for small businesses and lenders:
What’s in the package for small businesses?
- $310 billion for the Paycheck Protection Program (operated by the Small Business Administration), of which $60 billion is set aside for smaller lenders such as community banks and credit unions.
- $60 billion for the SBA’s Economic Injury Disaster Loan program, with $10 billion of that available for grants.
When does the SBA start accepting PPP loan applications again?
Monday, April 27, 10:30 a.m. ET: The SBA will begin accepting loans again from “approved lenders on behalf of any eligible borrower.” That’s according to a joint statement today by SBA administrator Jovita Carranza and Treasury Secretary Steve Mnuchin. “This will ensure that SBA has properly coded the system to account for changes made by the legislation,” they added.
What if I’ve already submitted an application?
That depends, and many details are still unclear. The original rollout of the Paycheck Protection Program was fast-moving and chaotic, and it put smaller businesses at a disadvantage—particularly those that did not have existing relationships with a lender.
With banks overwhelmed by a flood of applications, some likely slipped through the cracks. We’ve spoken with many business owners who say their banks couldn’t process their requests in time, or they never received official communication from the SBA. According to Carranza and Mnuchin’s statement, the agency is now encouraging approved lenders to “process loan applications previously submitted by eligible borrowers and disburse funds expeditiously.”
But would-be borrowers are being encouraged to “work with an approved lender to apply.” In other words: It’s better to go through a lender and not rely on the SBA directly. If you’ve already applied through a lender and been approved, contact your lender for an update. We’re reached out to the SBA for more specifics on what businesses that already applied should do and will update this post if we hear back.
Where can I find a lender?
As many businesses learned the first time around, larger banks are typically only working with existing customers, and finding a lender that’s accepting new customers is difficult. The $60 billion carveout for smaller lenders in the latest round of funding is meant to address this problem, but only time will tell if this proves true. With limited funds allocated to small business relief, the reality is that many loan seekers will not be able to get it. The SBA’s searchable database of eligible lenders has not been much help for a lot of proprietors. Alternatively, there are a few lender lists out there—SmartAsset has one, for example—that specify which lenders indicate they are accepting new customers.