$3.2B aid OK’d for Maryland businesses

Loans approved in the 2nd round of Paycheck Protection Program

More than 34,700 Maryland small businesses were approved for $3.2 billion in loans during the first week of a renewed round of the federal Paycheck Protection Program, the Small Business Administration said Monday.

The program, designed to offer relief from the economic impact of the coronavirus pandemic, had re-opened April 27 after Congress approved an additional $310 billion of the forgivable loans.

In the first five days of the program’s second round, the SBA approved more than 2.2 million loans totaling $175.7 billion.

More than 5,400 SBA-approved lenders participated in doling out the loans, with an average amount of $79,000. More than 70% of loans were for $50,000 and less.

Bank of America said Monday it has become the top lender in the second round of funding, processing applications for more than 250,000 small businesses. In Maryland, the bank said it confirmed funding for 4,484 loans totaling $354 million, while another 10,734 loans are either being processed by the bank or have been submitted for processing to the SBA. The average amount for processed loans has been $78,900.

Small businesses and members of Congress had criticized the bank at the outset of the program, arguing that it placed unfair restrictions on its application process and blocked some small businesses. A class action lawsuit filed in Baltimore accused the lender of unlawfully prioritizing existing borrowing clients. But a federal judge last month ruled against the small businesses, saying the bank is permitted to place such restrictions.

Some Maryland lenders had reported difficulties accessing the SBA’s system to upload applications once the program reopened, the Maryland Bankers Association had said last week.

On Friday, Sen. Chris Van Hollen, a Maryland Democrat, urged U.S. Treasury Secretary Steven T. Mnuchin to clarify the program’s loan forgiveness requirements.

The program provides funding for up to eight weeks of payroll, mortgage and rent payments as well as utilities to businesses that keep workers on during the crisis. The SBA will forgive loans if at least 75% of the amount was used for payroll.

“If a small business or non-profit applies for forgiveness after the eight week covered period and qualifies, they should know the tentative date on which they will be repaid by their lender after submitting their loan forgiveness application,” Van Hollen said in the letter. “Without a clearly defined timeline and process for repayment of the loan, small business owners and non-profit organizations do not have the information necessary to make informed financial decisions for their businesses or organizations.”

In the first round of $349 billion in funding, which ran out April 16, paycheck protection loans went to 26,068 businesses statewide, the SBA said. Many small businesses complained about missing out on that round.

A group of independent restaurants has urged lawmakers to make changes to the program to allow money to be spent after June 30, when more restaurants may be able to reopen.