North Bay banks accepting federal small-business coronavirus relief loan applications
Start your pencils.
North Bay businesses may again tap into Paycheck Protection Program loans at their area banks, with the portal fully opening to all applications starting Jan. 19, the U.S. Small Business Administration announced Wednesday.
As part of the $2.3 trillion federal relief package signed into law last month that also includes $110 billion in tax benefits, the $284 billion lending mechanism represents the second wave of PPP loans available to companies trying to survive amid the COVID-19 economic upheaval.
Staggering the waves of applications, the SBA opened its loan portal to PPP-eligible lenders with $1 billion or less in assets for first- and second-draw applications on Friday.
As of Jan. 19, the federal administer of the program had already approved about 60,000 PPP loan applications submitted by nearly 3,000 lenders. The collective amount of the loans already totals $5 billion in the first week.
First in line: CDFIs
The first group of loans were submitted through “community financial institutions” on Monday, according to the SBA. These are defined as community development financial institutions, which are designed to promote economic vitality in distressed communities. CDFIs, which use SBA form 3507, receive a designation from the federal government that enables small businesses in low-income and minority-based communities to gain access to capital.
The process runs through March 31.
Exchange Bank Chief Credit Officer Michael Sullivan said his Santa Rosa bank stands ready to accommodate the influx of customers. Like the process in the first round of funding implemented more than six months ago, communications and document sharing will be handled electronically.
The bank processed more than 1,700 loans for North Bay businesses in the first round. Over three-quarters of these loans were classified in worth as under $150,000.
Bank of Marin also reported it had handled more than 1,800 around the San Francisco Bay Area.
What’s different this time with PPP loans
Key differences this time around include an allowance for the business to receive forgiveness on the loan and take the expense as a write off — a corporate maneuver the Internal Revenue Service eliminated during the first wave of loan funding. The IRS called it “double dipping.”
Another change involves 501(c)(6) organizations to apply for loans.
For requirements, borrowers with fewer than 300 employees may be eligible for second draws of PPP funding if they met the criteria from the first.
SBA Administrator Jovita Carranza, along with U.S. Treasury Secretary Steve Mnuchin, has referred to the program as an “economic lifeline to millions of small businesses.” The program’s intent was to provide funding for businesses to keep at least three quarters of its staffing levels.
The PPP funding program has provided 5.2 million loans valued at $525 billion to save 51 million jobs at U.S. businesses, the SBA added.
Susan Wood covers law, cannabis, production, agriculture and transportation as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times in San Diego County, Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com.
