With the second round of Paycheck Protection Program loans in its initial stages this week, banks await final word on when the larger round of loans can be written.
The Small Business Administration opened up lending by community financial institutions on Monday, and was set to open lending by Community Development Financial Institutions and minority deposit institutions and others today.
In guidance Tuesday, the SBA said it would open wider lending “shortly,” though didn’t offer a specific day.
Banks and borrowers themselves are still waiting for final guidance on when they can start lending, though it could be as early as Friday or Monday.
“We have been told that ‘soon’ SBA intends to reopen the PPP for all banks” to offer the next round of loans,” Chris Pinkham, president of the Maine Bankers Association, told Mainebiz.
He said banks are expected to process both “First Draw” applicants, or applicants who did not participate in the first round of lending last summer, and “Second Draw” applicants, which will be companies that participated in the first round but are also eligible for the second round.
Pinkham said SBA created an application process for banks and credit unions to re-authorize access to the portal where loan applications are submitted.
This round of the PPP will authorize up to $284 billion toward job retention and certain other expenses through March 31, and by allowing certain existing PPP borrowers to apply for a PPP Loan, the SBA said Tuesday.
This round will be open to companies with 300 or fewer employees that have had a 25% reduction in gross receipts.
Because of the concern that money will once again be snapped up quickly, banks are already taking loan applications, but are waiting for the SBA to open the portal.
“We’re getting our customer information in there so once the SBA [opens the portal] we can push the ‘go’ button,” Renee Smyth, executive vice president at Camden National Bank, told Mainebiz.
She said she expects the process to be “fast and furious.” Camden National is welcoming both “First Draw” and “Second Draw” applicants and has been guiding customers through the process.
The latest round of loans will initially address small businesses, nonprofits and venues, as well as businesses owned by minorities, underserved populations, veterans and women.
The SBA reopened the PPP loan portal Monday morning, initially just for community financial institutions that work with underserved small businesses, the agency said. At least $15 billion has been set aside for community financial institutions.
The community financial institutions could include Community Development Financial Institutions, Minority Depository Institutions, Certified Development Companies or Microloan Intermediaries.
These lenders made up approximately 10% of all PPP participating lenders in 2020. A First Draw PPP loan is for those borrowers who have yet to receive a PPP loan before the program closed in August 2020.