Greetings Community Leaders
The lenders in our state did amazing work earlier this month providing Paycheck Protection Program (PPP) loans for local businesses, with approval for more than 30,000 loans for nearly $7 Billion secured out of the $349 billion national total. The U.S. Small Business Administration notes they did 14 years’ worth of loans in 14 days.
(https://www.sba.gov/sites/default/files/2020-04/PPP%20Deck%20copy.pdf)
Recognizing the initial $349 billion PPP and $10 billion Economic Injury Disaster Loan (EIDL) program was exhausted in only 14 days, Congress is in the process of authorizing another round of funding to help businesses - and DFI is eager to get the word out and work with our financial institutions as needed to provide relief to Washington businesses – in particular, those in typically underserved and minority communities. We hope you will share this information with the businesses you work with to help ensure more small businesses will apply sooner than later for this program.
On April 21, the Senate reached a deal to provide $470 billion in new coronavirus relief, including $310 billion going toward the SBA's PPP, $50 billion to the EIDL program and $10 billion for the SBA’s Emergency Economic Injury Grant program. The House is expected to vote this week on the funding bill.
Understanding that the first round of loans were funded on a first-come first-served basis and that some of our more underserved communities and minority businesses may not have been able to participate in this process, we are reaching out to you today to ask for your help in getting the message out to small businesses – especially minority businesses.
Based on what we have seen from the Senate, the new round of funding may include:
Additional Funding & Reforms to PPP: $310 billion in additional lending authority for PPP with key reforms to expand access to more small businesses and better serve the needs of unbanked and underserved small businesses and nonprofits.
This $310 billion includes:
$60 Billion Set-aside for Smaller Lenders: A $60 billion set-aside within PPP for small and mid-sized banks and credit unions as well as community-based lending institutions. Most importantly, this set-aside funding will help ensure that unbanked and underserved businesses can get access to PPP. This includes minority-owned businesses, rural businesses, small mom and pop businesses, and smaller nonprofits that too often have been pushed to the back of the line in the program.
The set-aside is broken down as follows:
· $30 Billion to Community-Based Lenders: $30 billion will be dedicated to community-based lenders, specifically including Community Development Financial Institutions (CDFIs), Minority Depository Institutions, SBA micro lenders, and certified development companies/SBA 504 lenders, as well as the smallest credit unions and banks with assets under $10 billion.
· $30 Billion to Small & Mid-Sized Lenders: $30 billion will be dedicated to small and mid-sized credit unions and banks with assets between $10 billion and $50 billion.
$50 billion for the SBA’s Economic Injury Disaster Loan program, which will allow approximately $300 billion in loans to small businesses.
$10 billion for the SBA’s Emergency Economic Injury Grant program.
The SBA has provided some guidance for businesses moving forward
Businesses seeking loans under the CARES Act should start with their current bank/lender, as that is the fastest, surest route.
If a business doesn’t have an existing lender, SBA has options:
Online PPP Lender Finder (www.sba.gov/PaycheckProtection/Find),
A list of SBA lenders on the district website (www.sba.gov/wa).
Some banks are prioritizing PPP lending to pre-established customers:
Banks are subject to “Know Your Customer” (KYC) laws, put in place to reduce crimes such as terrorism and money laundering.
Prioritizing lending to existing customers ensures compliance with KYC and gets money out the door more quickly.
Not all banks are participating, with reason:
Lenders are the go-between for the U.S. government and borrowers. If their loans don’t comport with pending federal guidance or rules, some provisions such as forgiveness for PPP loans may not be forthcoming.
Because of the emergency, funds are available before the federal government has had time to issue guidance to lenders on how to implement the loan programs.
If loans made now don’t comply with future guidance, borrowers may not be eligible for forgiveness and other benefits. If that happens, customers will be angry and lenders may have liability.
Other Resources
A Zip code-based only map directory of approved lenders may be found on the SBA web site at:
The following federal agency websites are providing the most up-to-date and accurate information on CARES Act lending:
www.sba.gov/coronavirus (the first place where updates are made)
The SBA also urges businesses to explore other funding options:
Since funding continues to be a top need for small businesses, traditional SBA lending programs – ranging from $500 to $5.5 million – are still an option for small business.
Plus, the SBA is automatically paying the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months; and, on new loans issued prior to September 27, 2020.
The SBA also offers Express Bridge Loans which enable small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
Also look into additional federal resources for small businesses, like tax relief from the IRS, scam alerts from the FTC, and USDA funding relief for agriculture businesses
Also a great resource: Subscribe to get email alerts at www.SBA.gov/updates