2021 is opening with a running start – are you ready?
According to the Business Journal, the first two days of the new PPP are only open to borrowers using the PPP for the first time, and “community financial institutions” have priority to submit loan applications. Additional lenders can participate in the PPP “a few days later,” the SBA stated in a press release.
Financial organizations take note: when the SBA PPP was first established last March as part of the Coronavirus Aid, Relief & Economic Security (CARES) Act, many bankers and credit unions – along with their customers – missed out. First, the program was immensely popular: the initial $349 billion in loans was depleted within weeks, with an additional $310 billion added to the program in April 2020.
Secondly, many banks (including major institutions) were simply caught flat-footed, either not anticipating the program’s popularity or lacked the necessary technical infrastructure to support the PPP loan process.
For any organization looking to capitalize on this round of PPP loans, action is critical – as of writing, the PPP has been open for several days and the rush for this round of funds has already begun. However, with the right SBA PPP program, a prepared digital lender can still catch up.
What’s Different This Time
The round of PPP loans is a part of the $900 billion Consolidated Appropriations Act, approved last December. Of that total, $284 billion is reserved for PPP, a smaller amount than what was offered last year.
But the totals aren’t the only things different this time around. In an article from late December, the National Law Review outlined some of the major differences in the third round of PPP loans. They include:
- First time loans are capped at 2.5 times the borrower’s payroll with a cap of $10 million; second time loans are capped at $2 million
- Eligible businesses seeking a second PPP loan must have fewer than 300 employees
- 501(c)(6) non-profits are eligible for funds; however, firms focused on political lobbying or have significant ties to China are not
- Expanded loan uses include cloud computing software and COVID-19 protection gear
Additionally, the National Law Review reports the forgiveness application for loans under $150,000 has been greatly simplified.
Forgiveness, Please: Loan Forgiveness & the PPP
The US Chamber of Commerce provides a useful outline for PPP loan forgiveness. Simply put, employers who kept (or rehired) employees during the pandemic while also keeping salaries the same are eligible for loan forgiveness. Employers who don’t meet those requirements are still eligible for partial forgiveness.
Businesses have to submit an application for forgiveness to the same institution that granted them a PPP loan.
Get PPP-Responsive Digital Processing Program Up & Running In 48 Hours
As we stated earlier, it’s important for lenders to not get caught flat-footed with this current round of PPP loans. That’s why we developed the MeridianLink SBA PPP Fast Track Processing Program, our web-based digital solution. Ready to be leveraged in roughly two business days, our PPP turnkey solution allows financial institutions to:
- Offer online mobile-ready SBA PPP applications
- E-sign the pre-filled SBA form 2483 plus additional owner’s addendum
- Create and send an automated checklist to the primary owner with a list of required documents
- Allow the business to securely upload any required documentations
- Submit the loan for approval to the SBA with our E-Tran direct interface
- Take advantage of SBA PPP without using any other MeridianLink products or services.
Get on your feet quickly in 2021. Contact a MeridianLink expert today!