Financial firms back in the PPP business
One credit union says it’s ‘swamped’ with loan bids
With the Paycheck Protection Program rolled out again this week to extend aid to struggling small businesses, River City Federal Credit Union CEO and President Jeff Ivey put on another hat.
“Right now, I’m an SBA loan officer,” Ivey quipped, adding that San Antonio-based River City has been “swamped” with Paycheck Protection Program applications from borrowers. He had to step in to assist with the demand.
The Small Business Administration reintroduced the program Monday to offer low-interest, forgivable loans to businesses pummeled by the pandemic. The funding — which can be used for payroll, mortgage interest, rent or utilities — is part of a $284.5 billion relief bill signed into law last month.
First-time PPP borrowers with 500 or fewer employees are eligible for loans of up to $10 million.
Businesses that received PPP loans last year can apply this year for loans of up to $2 million, but they can employ no more than 300 people and they have to show their revenue dropped by 25 percent between comparable quarters in 2019 and 2020.
Last year, the program initially was funded with $349 billion, but when that ran out in
mid-april, lawmakers replenished it with $310 billion. About $130 billion went unused, though.
Many minority-owned businesses were shut out from obtaining a PPP loan last year. So, this time around, community financial institutions — with their connections to minority communities — got first dibs to make loans.
That limited the number of institutions in San Antonio able to make loans over the program’s first four days. Among the institutions that have been accepting applications are River City, Generations Federal Credit Union, Firstmark Credit Union, Liftfund and Peoplefund.
“We’ve received a hundred already,” River City’s Ivey said. “To give you some perspective, we did about 500 of these last year. To me, that just shows — and we knew this anyway — there’s still a lot of businesses that are really hurting and really need the support.”
Its average PPP loan size was $24,000.
River City, which is designated a community development financial institution and a minority depository institution, primarily has been making PPP loans to sole proprietors and independent contractors.
“A $5,000 loan means a great deal to them,” Ivey said. “I worked for big banks for a lot of years, and that’s not their sweet spot. They look for the larger deals. To really strengthen the business community here, these small operators … need to be healthy. They need to be viable. They need access to capital, so we’re glad to fill the gap.”
Starting today, institutions with under $1 billion in assets can begin making loans to both first-time and second-time PPP borrowers. San Antonio’s Crockett National Bank, which made about 265 PPP loans totaling more than $19 million last year, will be among them. San Antonio-based Lone Star Capital Bank only will participate on a “limited basis” with larger businesses, CEO and President Danny Buck said.
All other lenders can begin making PPP loans starting Tuesday. San Antoniobased institutions Frost Bank, Broadway Bank, Vantage Bank Texas, Jefferson Bank and the Bank of San Antonio each intend to participate in what’s called the “second draw.”
Restaurants and hotels can receive as much 3.5 times their average monthly payroll, while other businesses are limited to 2.5 times. First-draw borrowers have to obtain loan forgiveness on their loan before applying for a second PPP loan, said Mark Johnston, vice president of commercial services at Generations.
Generations has received about two to three dozen applications this week. Last year, it made 85 loans totaling about $3 million.
The number of PPP loans Liftfund made this week to Bexar County businesses already exceeds those made last year. It has made 360 loans, averaging just under $25,000. Last year, it made 214 loans, averaging about $22,500 each, said Celina Peña, Liftfund’s chief advancement officer.
Liftfund provides loans to startups, restaurants and other businesses that can’t get loans from traditional financial institutions.
Last year, many larger businesses — including publicly traded companies — got the jump on very small businesses to land PPP money.
Peoplefund’s San Antonio office has received as many as 80 PPP loan applications this week. It made eight PPP loans last year in San Antonio.
It typically handles 10 to 15 small-business loan applications a month. It can loan up to about $200,000, said Bill Anderson, regional lending manager for South Texas.
Anderson attributed the jump to Peoplefund rebuilding its presence in San Antonio. The nonprofit has offices around the state.
“People are interested in getting them (PPP loans) as quickly as possible and not having to wait for everything to open up” with the banks, Anderson said.
Frost Bank, the largest regional bank based in San Antonio, made more loans here than any other institution last year.
It’s not sure what demand will be like when it begins accepting applications on Tuesday, however.
“We expect a number of our customers who got PPP loans last time will want to get another loan this time,” Frost Bank spokesman Bill Day said. “The economy is still pretty tough and our customers need help.”