The
Small Business Administration (SBA) announced on Friday that it
would launch a third round of the Paycheck Protection Program
(PPP) this week, starting with small community financial
institutions on Monday, and larger lenders in coming days.
By prioritizing smaller lenders, the SBA hopes to address
criticism from lawmakers that minority and women-owned
businesses did not get enough money during the first two PPP
rounds last year compared with bigger businesses.
Administration officials told reporters on Friday they expected
the funds would be sufficient to meet demand.
Under the program, lenders on behalf of the government
distribute loans that can be forgiven provided the cash is spent
on eligible costs, such as payroll and rent. To date, the PPP
has distributed $525 billion through more than 5 million loans.
Congress authorized the new funds last month as part of another
pandemic stimulus package which also loosened PPP rules on who
can get cash and what it can be spent on.
Among the key changes, companies which took cash during the
first two rounds will be allowed a second PPP loan provided they
can show a 25% hit to their revenues. To address worries over
fraud, the SBA is also introducing new due diligence checks.
For more details on program changes see FACTBOX [L1N2JJ2XB].
While lenders say the changes are positive, some are worried
they may cause some initial snags, especially as the updated
application forms and SBA rule guidance were only released on
Friday.
"It's all great but it's really complicated," said Dan O'Malley,
CEO of Numerated which provides PPP loan processing software.
(Reporting by Michelle Price; editing by Diane Craft)
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