New PPP Round Rolls Out, Places Emphasis on Community Financial Institutions

The Trump Administration relaunched the Paycheck Protection Program Monday, with the first days of lending reserved for specific types of community financial institutions.

The design of the new round of loans is intended to ensure that the neediest businesses receive loans and that small lenders can make loans, Bill Briggs, acting associate administrator with the Small Business Association, said Monday during a briefing for lending institutions.

The Trump Administration has been criticized for the management of the first round of PPP loans, with congressional committees and the SBA’s inspector general questioning whether loans had reached the businesses most in need of the funding.

The end-of-year economic stimulus legislation provided $284,5 billion for a new round of PPP loans.

“PPP was an incredible success in its first round,” Cailin Schmeer, a public affairs officer at the Treasury Department, said during the briefing.

During the next two days, lending is limited to Community Development Financial Institutions, as well as Minority Depository Institutions, certified development corporations and microlenders, Briggs said. And only businesses that are receiving their first PPP may apply.

Starting on Wednesday, community financial institutions may begin accepting applications for businesses applying for their second PPP loan, he said.

SBA has set aside $15 billion for lending by those institutions.

Shortly after that, all lenders will be able to begin submitting loan applications to the SBA.

SBA officials also said $15 billion has been set aside for financial institutions with assets of less than $10 billion.

In addition, the SBA has added a section to the application asking businesses for demographic information. The SBA’s inspector general has said that it was difficult to judge whether the neediest businesses received loans during the first round of PPP lending because the application did not request that information.

Trump Administration officials said they want PPP loans to be well-targeted for the businesses that need them the most.

“This updated guidance enhances the PPP’s targeted relief to small businesses most impacted by COVID-19,” Treasury Secretary Steven Mnuchin said.

“Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery,” SBA Administrator Jovita Carranza said as the guidance was released.