More PPP to rescue
New round of federal assistance for businesses is coming
Nevada small businesses will soon have another opportunity to apply for a forgivable Paycheck Protection Program loan.
The next round comes at a crucial time for small businesses like All Fired Up, a paint-your-own pottery studio in Las Vegas, which exhausted PPP funding months ago and has seen sales suffer as the state reimposed restrictions amid a surge of COVID-19 cases.
“We will most likely have to apply; we have no other choice,” said co-owner Gail Schomisch. “We’re also extremely nervous about that because we have already taken one PPP loan, but if we want to keep our doors open, we will have to take another one.”
Banking leaders across the state said their companies are well-prepared to handle the next wave of PPP applications after two previous rounds in 2020. President Donald Trump signed a $900 billion COVID-19 stimulus package in late December.
The U.S Small Business Administration will initially accept only applications submitted by community financial institutions, or CFIS, lenders whose customers are minority-owned and economically disadvantaged businesses.
Starting Monday, applications for first-time borrowers submitted by these lenders will be accepted, followed by applications for second loans on Wednesday. The agency
said it will begin accepting applications from all its lenders within a few days of that initial period reserved for CFIS.
Doors stay open
The $659 billion loan program created in March under the federal relief package known as the CARES Act brought two installments of PPP funding in 2020 after the $349 billion first round was exhausted in less than two weeks. More than $4.1 billion in PPP funds went to Nevada businesses, according to the Nevada Bankers Association.
The new federal stimulus package signed into law by Trump on Dec. 27 will provide more than $284 billion for forgivable PPP loans.
Companies will have 24 weeks from the date they receive a loan to use the money. While 60 percent of the proceeds must be used for payroll in order for loans to be forgiven, companies can use the rest for employee health benefits, mortgage interest, rent, utilities and expenses that are essential to business operations.
Schomisch said the next round of PPP funds will help her events business stay afloat. She saw a 90 percent sales reduction in 2020 from the previous year.
“Until events are allowed, I can’t function. I’m an events company. There are no events,” she said.
Randi Thompson, Nevada director of the National Federation of
Independent Business, said the next round of PPP funding will be critical for hard-hit industries like bar and food operators, “who are being forced to operate at 25 percent.”
Prepared for next PPP wave
Banking leaders across the Silver State said they’ll be prepared when the SBA rolls out guidance for the “second draw.”
Phyllis Gurgevich, president and CEO of the Nevada Bankers Association, said the new package will have “business-friendly inclusions”
like the one-page simplified forgiveness process for PPP loans under $150,000.
The PPP will allow a second draw of funds for small businesses with 300 or fewer employees that have seen a 25 percent drop in revenue during any quarter of last year compared with the same quarter of 2019, Gurgevich said.
Nevada State Bank president and CEO Terry Shirey told the Review-journal that the bank is in constant communication with its borrowers.
“The lending in the first wave of PPP in 2020 was unprecedented, and we managed the tsunami of requests as best we could,” said
Shirey, adding that the bank will do all it can to ensure that it is even better-prepared for the next wave of funding.
Other lenders, like credit unions, said they expect demand similar to that of the first round of PPP funding, which was exhausted. But they’ll be ready this time around.
Jeremy Gilpin, executive vice president of Greater Commercial Lending, said there’s better communication with the SBA this time.