The stimulus package adopted last month included $ 284 billion in funding to restart the small business relief effort, which last year provided $ 523 billion in loans to 5.2 million beneficiaries. The new financing will be available to both new applicants and some returning borrowers.
Borrowers seeking a second loan will need to demonstrate a 25% drop in gross revenue between comparable quarters in 2019 and 2020. Second loans will also be limited to businesses with 300 workers or less, and amounts will be capped at 2 millions of dollars.
First and second time applicants can borrow up to 2.5 times their monthly payroll. (People working in the accommodation and food service industry looking for a second loan can borrow 3.5 times their payroll, a concession to the devastation these industries have suffered.) Loans – which are made by banks but backed by the federal government – can be forgiven if borrowers spend at least 60 percent of the money to pay workers and use the rest for other eligible expenses.
Starting Tuesday, loans will be available from thousands of lenders, including national banks like Bank of America, JPMorgan Chase, and Wells Fargo; most regional banks; and fintech companies like PayPal.
Some small lenders have already started. Community development finance institutions, minority depositories, and certified development corporations – specially designated lenders who focus on underserved populations, including black and minority-owned businesses – have been allowed to start receiving loan applications this week. And on Friday, lenders with $ 1 billion or less in assets will be allowed to start submitting claims.
The Small Business Administration, which manages the program, did not say how many applications it has already received. Unlike the first round, when the agency approved loans instantly, approvals will now take at least a day due to the new fraud protection measures the agency has adopted.