That Small business administration said Tuesday that it approved more than 400,000 loans worth approximately $ 35 billion through the Paycheck Protection Program, a vital lifeline for small businesses ravaged by a pandemic.
The numbers are the first to be released by the SBA since the program reopened earlier this month. About 66% of the loans were for $ 60,000 or less, with the average loan size being about $ 87,000.
congress established the rescue fund earlier this year with the passage of the CARES bill in March and approved an additional $ 284 billion to provide a second round of forgiving small business loans as part of its broader $ 900 billion COVID relief plan bringing the total funding value of the program to $ 806 billion.
In an attempt to address previous criticisms that the program favored larger borrowers, the SBA took a step-by-step approach, initially offering only first-time borrowers the available loans and giving priority to certain lenders who focus on underserved communities to help owned businesses of minorities. The agency opened the program more broadly last week.
At least $ 40 billion has been allocated to businesses with 10 employees or fewer and less than $ 250,000 in loans in low-income areas.
Acting SBA administrator Tami Perriello said the agency will work to iron out previous program kinks and “quickly” deliver the loans to ailing companies while the checks are held in place.
“The agency is committed to ensuring compliance reviews are conducted at the front-end,” Perriello said in a statement, adding that the SBA also “has an obligation to address issues more efficiently in order to ensure fair and equitable access to small businesses to guarantee”. in every church. “
The resumed program is expected to bring much-needed relief to the U.S. economy after employers unexpectedly cut 140,000 jobs in December amid a nationwide spike in COVID-19 cases.
While the eligibility formula is the same for first-time applicants, only companies with 300 employees or fewer can get a second loan, which is capped at $ 2 million. Borrowers applying for a second eligible loan must also demonstrate that their gross earnings in a quarter of 2020 were down 25% from the same quarter of 2019.
Second-time borrowers borrowing $ 150,000 or less are not required to immediately provide documents showing a 25% reduction in revenue and can do so according to the rules before filing an application for waiver.
In the first round, companies with fewer than 500 employees could receive up to $ 10 million. Businesses will still need to spend at least 60% of the money on maintaining payroll in order for the government to cancel all credit. The remaining 40% can be spent on operating costs such as mortgages, rent and utilities.
Over the course of about four months, the PPP distributed approximately $ 525 billion in forgivable loans to 5.2 million companies, saving an estimated 50 million jobs, the company said SBA. The program closed to new applicants in late July, with around $ 38 billion remaining in the fund.
The program is expected to close to all borrowers on March 31st.