Lenders who have successfully lobbied for more time to make Paycheck Protection Program loans now want more money made available for the program.
Although the PPP expiration date is recently extended From March 31 to May 31, there are fears that the program’s remaining $ 66 billion will run out before the end of April.
The amount of funds available could drop dramatically if thousands of apps blocked by error codes passed through the Small Business Administration portal. And a number of banks that stopped providing PPP loans resumed operations when the extension was passed.
The government “will disappoint a lot of people if it fails to mobilize in terms of putting money into play,” said Biz2Credit CEO Rohit Arora.
“If there is enough demand to deplete the funding, there is a very good argument to top it off,” said John Asbury, president and CEO of Atlantic Union Bankshares, an asset of 19.6 billion dollars in Richmond, Virginia.
The Biden administration’s decision to leave sole proprietors, independent contractors and other small contractors qualify for larger loans– replacement of net profit by gross income as the basis for calculating the maximum loan amount – increase in interest for the program. The SBA implemented the change on March 8.
“We are seeing our pace increase” due to the change in administration, said Sam sidhu, vice president and chief operating officer of the $ 18.6 billion asset client bank in Wyomissing, Pa.
“We’ve had the two biggest weeks we’ve had so far, the last two weeks, over 20,000 loans,” Sidhu added. “We expect this week to be just as big, if not bigger. The volume of loans has increased because people are coming off the sidelines. “
The PPP was designed to provide forgivable loans of up to $ 10 million to small businesses with 500 or fewer employees. Since loan amounts were initially calculated from a borrower’s pre-pandemic profit, smaller businesses, which typically operate with thinner margins, were effectively shut down during the first phase, which lasted from April 3 to August 8.
The SBA approved 5.2 million loans totaling $ 525 billion in the first phase, for an average loan size of $ 101,000. Congress authorized $ 284 billion in funding when the PPP was re-authorized end December; Recent legislation added an additional $ 7 billion to the program.
To limit cases of fraud, Biz2Credit, the largest PPP lender by total loans made in the current phase, encouraged small businesses to work with accountants to get their affairs in order before applying.
Arora said he was concerned that funding would run out before many applicants with “real papers” were able to apply for SBA approval. “My concern is that by the time they are ready, the money will already be used up,” he said.
Atlantic Union, one of several banks that stopped making PPP loans as the expiration date approached, received a dozen requests immediately after its portal reopened on Tuesday evening.
“Seeing that we already had apps coming up meant people were going to the website and pinging any favorite links they might have had,” said Alison Holt-Fuller, chief risk officer at premiere. product and business line at Atlantic Union.
With an extension in place, Atlantic Union intends to continue processing applications until the program ends or funds run out.
“It’s a very popular program,” Asbury said. “There is a lot of popular support for this.”
As bankers begin to discuss increased funding, Sidhu said, interest from lawmakers has been lukewarm.
“We hear that no one is talking about supplementing,” Sidhu said. “But we’re not going to give up.”