Hampton Roads businesses get more time to apply for lifeline loans
Regional banks reacted quickly when President Joe Biden signed legislation Tuesday extending the Paycheck Protection Program by two months to May 31.
Congress established the program last year to provide government-backed loans to support small businesses in response to the COVID-19 pandemic. Expenses related to payroll, rent and operations can be forgiven, meaning many of the loans will convert into grants. The SBA reports it has approved more than 8.7 million loans valued at over $734 billion, with about $194.5 billion already forgiven by the government.
Biden signed the PPP Extension Act of 2021 the day before the program was set to expire. The act also gives the Small Business Administration another 30 days, through June, to process applications.
When Richmond-based Atlantic Union Bank heard the deadline for new PPP loans had been extended, Alison Holt-Fuller, its head of product management and business first line risk management, said she immediately emailed to greenlight the bank’s PPP team into action and to turn its application portal back on. The bank had shut down its online portal March 19 in anticipation of having to finish working through applications by the end of March.
“We’re uncertain how much demand we’re going to have coming out of this extension,” Atlantic Union CEO John Asbury said, although the bank saw a pop in applications before its initial deadline.
Asbury said he wants to make sure qualifying businesses understand they can still come into the program for the first time if they’ve never received a PPP loan before. The simplified forgiveness process for borrowers getting loans less than $150,000 involves a simple one-page form, he said, emphasizing that 85% of the bank’s PPP loans last year were below that threshold. It’s worth researching to see if you’re eligible, Holt-Fuller added.
The extension also gave some breathing room for applicants still waiting to hear back from the SBA, which had a backlog, Asbury said. Atlantic Union received just over 6,000 applications Jan. 20 through March 19, with a little over 5,000 receiving SBA approval. Some applications were withdrawn by businesses that had applied through multiple banks to see which one got through first, Holt-Fuller said. About 40% of its PPP borrowers last year returned for another loan this year, they said.
Suffolk-based TowneBank will continue
to accept PPP loan applications for existing and new clients until the end of May, Chief Operating Officer Brad Schwartz said.
During the second round of the program from January to March, the bank approved more than 2,800 loans for $430 million with a steady flow of demand and expects many more applications during the next 60 days, he said.
The second round is open to businesses, nonprofits, churches and schools that had a decline in revenue of 25% or more in 2020 because of the pandemic, he said. Recent changes by the SBA in calculating the loan amount for self-employed and Schedule C borrowers is also producing larger loan amounts for those borrowers, he said.
“We consider this our civic duty and have the staff ready to handle the application volume,” Schwartz said.
Larger lenders Bank of America and Truist are also continuing to accept loan applications. For 2021 through this past Sunday, Bank of America was the No. 2 PPP lender in the U.S. with nearly $8 billion in loans to more than 130,000 businesses, according to an SBA weekly report. Truist was the No. 8 PPP lender with more than $2.78 billion in loans to more than 28,000 small businesses.
Bank of America will continue to accept new applications until 11 p.m. May 14 to leave enough time to ensure any questions can be answered ahead of the federal May 31 deadline, said Charlie Henderson, Hampton Roads market president for Bank of America.
“We have seen strong demand from small business owners in Hampton Roads, across
the commonwealth and around the country,” Henderson said.
Truist, the result of the merger of BB&T and SunTrust banks, would send invitations to apply starting March 31 to eligible Truist clients who’ve registered their email address to get PPP alerts from the bank’s website, said spokesman Mike McCoy. The bank is incorporating lessons learned from the first round and is implementing proactive outreach efforts and guidance to “potential second draw borrowers in lowand moderate-income communities and majority minority areas, and to minorityand women-owned businesses in our client, supplier and community development networks.”
For small businesses and sole proprietors that need help, the Small Business Development Center of Hampton Roads is helping counsel businesses on the programs and other resources with trained staff and a capital access expert, Executive Director Jim Carroll said. The extension gives small businesses more time to figure out which lenders are taking applications again, including credit unions and fintech (financial technology) lenders, Carroll said.
“There is still demand for PPP loans in the region, both for the first and second draw,” Carroll said.
The Small Business Development Center is available for counseling over the phone or via Zoom. For more information, visit Hrsbdc.org.