Congress is poised to authorize a new version of the Paycheck Protection Program that checks off most of the items on bankers’ wish lists.
The latest stimulus bill, which is on the cusp of passing, would allocate $285 billion in PPP funding, according to legislative summaries. It would allow existing PPP borrowers with less than 300 employees that can show a revenue decline of at least 25% to apply for a second loan of up to $2 million.
The plan expands the list of eligible expenses for forgiveness to include software, cloud computing expenses and human resources and accounting costs. And it creates a simplified forgiveness application for loans of $150,000 or less that only requires borrowers to state the number of employees retained and the amount of PPP funds spent on payroll.
The relief package would also let PPP borrowers claim deductions for expenses covered by their loans.
Addressing a key complaint of PPP borrowers who obtained a $10,000 advance under the Economic Injury Disaster Loan Program, the new blueprint eliminates a provision that required borrowers to deduct the advance from their forgiveness amounts.
"This plan looks better” than the original rollout, said John Buhrmaster, president and CEO of 1stNational Bank of Scotia in New York. Barring any last-minute changes, he said, the $603 million-asset bank is almost certain to participate in the renewed effort.
It shouldn’t take long to start processing applications once the new relief package is signed into law, bankers said.
“We’re ready to help our customers and community whenever a new stimulus passes,” said Jill Castilla, CEO of the $322 million-asset Citizens Bank of Edmond in Oklahoma. “We’ve been preparing to ensure we have streamlined processes for application and submission so we can focus on education and support for another round.”
“The process is there, the forms are loaded, our people are educated,” Burhmaster said. “As long as funding lasts, we’re going to get the money to the businesses that need it.”
Still, some bankers said they will need to take a look at the finalized package before jumping back into the program.
"We look forward to understanding the program and our potential role as soon as the details are clear," said Candice Caruso, director of governement guranteed lending at the $13.8 billion-asset WSFS Financial in Wilmington, Del. The new round of PPP "will bring much needed assistance to those impacted by the pandemic as the economy recovers and the vaccine is deployed."
Lenders said they expect the new funds to largely target specific industries that continue to feel the pain of shutdown orders and social distancing requirements.
“There were costs that everybody incurred to pivot to this new remote way of being” during the initial phase of PPP, said Julieann Thurlow, president and CEO of the $630 million-asset Reading Cooperative Bank in Massachusetts.
“Now the pain is definitely sector specific,” Thurlow added. “The hospitality industry is the sector that is being hurt the most.”
“I do believe the hospitality industry needs more PPP funding,” added Todd Nagle, president and CEO of the $1.7 billion-asset IncredibleBank in Wausau, Wis.
One drawback to the latest round of PPP is the planned reduction in origination fees for lenders, said Sam Sidhu, vice chairman and chief operating officer of Customers Bank in Wyomissing, Pa. But Sidhu said he is pleased lawmakers are moving ahead, noting that the $18.8 billion-asset Customers has thousands of potential applications waiting on the new round.
“We’re really glad that Congress took action,” Sidhu said. “There are a lot of small businesses that desperately need this money.”
Congress originally created the PPP, which offered forgivable loans up to $10 million to small businesses affected by the coronavirus pandemic, as part of a $2.2 trillion stimulus package enacted in March.
The Paycheck Protection Program’s $349 billion initial appropriation was
“We anticipate a great many applications will be submitted” once the new package is enacted, said Clem Rosenberger, CEO of the $1.7 billion-asset NexTier Bank in Kittanning, Pa. “This assistance is long overdue for many businesses. … We will begin updating all of our customers via email and social media as soon as details are released.”
