PPP back with second batch of aid
Programto focus first on small businesses and will roll out at community institutions
The Paycheck Protection Program, a federal stimulus meant to keep small businesses afloat during the pandemic, cameback online Monday at 8 a.m. Businesses that received the low-interest, forgivable loans from the first iteration of the program in 2020 will soon be able to apply for a second, and restaurants and hotels will soon be able to qualify for larger loans proportional to their payroll costs.
The program is open to businesses with 500 or fewer employees, which are eligible for first-draw loans of up to $10 million, while second-draw loans are limited to businesses with 300 or fewer employees and capped at $2 million. For their second-draw loans, restaurants and hotels can receive as much as 3.5 times their average monthly payroll, while all other loans are limited to 2.5 times. The funding is part of a second, $284 billion, relief bill signed into law last month.
This time, following criticism that the first round of the program served disproportionately few minority-owned businesses, it began a little differently. It rolled out first with community institutions, which tend to have stronger relationships with minority communities.
It was to Unity National Bank, the only Black-owned bank in Texas, that Shipley’s Do-Nuts franchisee Alan Bergeron turned when he applied for a Paycheck Protection Program loan last April. The loan helped him keep his employees on payroll when the universities and churches that drove much of the business at his two franchises — one on Scott Street between University of Houston and Texas Southern University, another off Loop 610 at Martin Luther King Boulevard — closed.
“My stores became a ghost town,” Bergeron said. “To be able to get a lifeline was crucial… I was able to keep people employed.”
Community institutions include minority desository institutions, Community Development Financial Institutions, Certified Development Companies and Microloan intermediaries. In Houston, such lenders — which include Unity, Golden Bank and American First National Bank — will be the only institutions able to accept PPP loan applications until at least Wednesday.
The Small Business Administration, which oversees the program, will issue further guidance on when other lenders, including major financial institutions, will be able to submit applications during the week.
Amegy Bank spent the weekend preparing for its go-ahead to start processing applications. When the SBA released the PPP application forms late Friday, Amegy’s technology team went to work making sure its online webform would collect all of the necessary information, Jentri Smith, the bank’s SBA lending manager, said. The bank also added a link to its webpage where small businesses can sign up to receive an email when the SBA allows the bank to begin accepting applications.
While businesses who have not yet received any PPP funds are already able to apply through community institutions, businesses looking for their second PPP loan will not be able to apply until Wednesday. There are separate applications for the first and second loans, and it is feasible for a business to receive both a first and second loan in 2021 before the programends. Both loans can be forgiven, making them essentially grants, if most of the money is used for worker pay and benefits.
Bergeron, who plans to apply for a second loan on Wednesday, praised the opportunity to receive a larger loan in proportion to payroll than previously. “That’s a great thing, and I mean to take advantage of that,” he said.
Emily Williams Knight, chief executive of the Texas Restaurant Association, agreed. “This is the lifeline restaurants needed at a critical juncture in our long-term road to recovery,” she said in a statement.
Applications are already flowing in at a steady pace, said Kwame Cain, Unity’s chief credit officer.
Carol Guess, who works with small businesses as interim president of the Greater Houston Black Chamber of Commerce, urged Houston-area companies to take advantage.
“For smaller businesses, firsttime applicants, community institutions and minority businesses, this round of funding is designed to correct the issues of the first round of PPP funding,” she said. “While it still may not be perfect, seize this opportunity to get funding.”