Second round of PPP funding intended to be more accessible, targeted for small businesses

Published 12:00 am Friday, May 8, 2020

By Natalie Anderson

SALISBURY — A delay in guidance, far fewer lenders and an early “mad rush” from businesses for financial relief accounted for the struggle for banks in mid-April to administer federal funding that ultimately was exhausted within a few days.

But the current second wave of funding is intended to be more secure now that lenders have worked out the kinks and measures have been implemented to ensure small businesses are the ones receiving the federal relief.

The second wave of funding became available for businesses and lenders on April 27, and it included $310 billion for the Small Business Administration’s Paycheck Protection Program, or PPP. The loans can be granted to businesses with 500 employees or fewer with some loan forgiveness if employers can maintain their payroll for eight weeks.

And about $60 billion of the second round of funding has been reserved for businesses without established banking relationships, such as rural and minority-owned businesses.

The first round of funding, which was $350 billion funneled from the federal government, ran out within days of becoming available. Delays in guidance and only a short period of time to become certified in lending the money led banks nationwide to struggle in meeting the immediate demand from businesses for financial relief. Only 1,700 financial institutions nationwide were certified to be an SBA loan lender before the first round of funding. That number has now grown to 5,425.

With the second wave of funds, as of Thursday, the SBA has made approximately 2.5 million PPP loans, totaling $185.4 billion nationwide, according to data from the SBA.

In North Carolina, as of May 1, the SBA has approved 56,512 loan applications for approximately $4.3 billion.

When the second round of funding became available, lenders had their “work strains figured out” and were ready to submit additional applications, said N.C. Bankers Association president and CEO Peter Gwaltney.

But the second round isn’t without its own set of issues. Gwaltney said other additional controls the SBA placed on the funding included restricting lenders from approving more than 350 loans per hour in the first few days, which posed a challenge for larger banks in particular.

Additionally, the SBA loan processing program was overloaded when the second round became available. Gwaltney said he recalls one banker in particular reporting that it took four hours to load one loan into the system and have it approved — a process that normally takes about 10 minutes.

Another purpose of the second round of funding was to ensure small businesses were receiving the funding. During the first round, the average loan size was more than $200,000. But for the second round, the average, according to the latest report from the SBA, is around $74,000.

“So that means smaller and smaller businesses are having their loans approved,” Gwaltney said.

Gwaltney also said larger corporations might have been deterred from borrowing money from the PPP after U.S. Treasury Secretary Steven Mnuchin noted some companies were receiving the funds that were intended for small businesses.

“We have noted the large number of companies that have appropriately reevaluated their need for PPP loans and promptly repaid loan funds in response to SBA guidance reminding all borrowers of an important certification required to obtain a PPP loan,” Mnuchin said in a statement on April 28. “To further ensure PPP loans are limited to eligible borrowers, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application.”

Moving forward, Gwaltney said a concern among lenders and borrowers is the forgiveness clause. He said the U.S. Treasury has not yet issued guidance on how the forgiveness will be calculated and determined.

Elaine Spalding, president of the Rowan Chamber of Commerce, said the chamber has continually checked in with local businesses on the status of their loan applications and need for financial relief. Overall, local businesses seem pleased that Congress passed another wave of funding, she said.

The chamber has also been in contact with banks and lenders, who she said are “working around the clock” and over the weekends to submit applications.

Spalding encourages businesses to look into applying for an Economic Injury Disaster Loan advance of up to $10,000 being offered by the SBA. The program is intended for businesses in the agriculture sector that are currently experiencing a temporary loss of revenue. The loan advance does not have to be repaid.

Applicants must apply for EIDL relief directly on the SBA website.

And as businesses transition in Phase One of Gov. Roy Cooper’s plan to reopen businesses and services, Spalding and the Rowan Economic Development Commission and the Rowan Tourism Development Authority are working on a joint effort to provide the local business community with economic recovery resources. Those additional resources are intended to be released sometime next week, she said.

“We want everyone to enter into this Phase One very safely so we can have a successful transition,” she said.

Contact reporter Natalie Anderson at 704-797-4246.

About Natalie Anderson

Natalie Anderson covers the city of Salisbury, politics and more for the Salisbury Post. She joined the staff in January 2020 after graduating from Louisiana State University, where she was editor of The Reveille newspaper. Email her at or call her at 704-797-4246.

email author More by Natalie