The second round of Paycheck Protection Program (PPP) funding to help small businesses affected by COVID-19 economic disruption is lasting longer and appears to be doing a better job of going to the people it’s intended to help than the first round did.
After the first round of $350 billion was gone in 13 days, with reports that public companies such as Shake Shack and Ruth’s Chris Steak House had received millions of dollars, the Small Business Administration (SBA) added regulations for the second, $321 billion round, which became available for application on the morning of April 27 and hadn’t been exhausted more than a week later.
“We did 14 years of loans in 14 days,” said Jeremy Field, regional administrator, SBA Pacific Northwest Region.
Several Idaho businesses shut out of the first round reported receiving funding in the second round, such as Russ Stoddard, founder and president of Oliver Russell, and Brian Cronin, owner and marketing director of Garabatos Spanish Preschool, both in Boise.
“I’ve never applied for government assistance, and I hesitated to do so even here but felt that it would really help us to be able to bounce back when we re-open, hopefully with our staff intact,” said Cronin, who also serves as executive vice president of Strategies 360, in an email message.
The preschool shut down in mid-March and had been paying its staff since then, he said.
Stoddard reported on LinkedIn that his business had received funding in the second round, after having been shut out in the first round.
Reports varied as to whether businesses found it easier to get funding from small financial institutions or large ones. Stoddard, for example, noted that he’d been turned down by a large bank and funded by a smaller financial institution. Trent Wright, president and CEO of the Idaho Bankers Association, contended it didn’t matter.
“I’ve talked to a number of community banks, and they are having the exact same success rate as large banks,” Wright said in an email message. “Perhaps some have said that because large banks set up large batches they are somehow getting an SBA loan priority number. That is not true. Large banks do not have more success than the smallest of lenders.”
By May 1, JPMorgan Chase said it had funded 409 loans in Idaho with an average loan size of $75,059, for a total of more than $30 million, said Darcy Donahoe-Wilmot, a Chase spokeswoman, in an email message.
Idaho Central Credit Union reported funding more than 1,500 loans within the first two days of the second round, said Laura Smith, director of public relations for the Chubbuck-based company, in an email message.
A number of Idaho businesses received PPP funding through MoFi, a Missoula, Montana-based community development financial institution (CDFI) that typically lends money to help businesses start.
“We are projecting we will fund 150+ Idaho businesses with PPP,” said Dave Glaser, MoFi president and CEO, in an email message.
MoFi funded PPP loans for businesses including Boise-based Tin Roof Tacos and Iron Barber, and Salmon-based Meadows Assisted Living Center, as well as Oliver Russell.
In an attempt to ensure more money reached small businesses, the SBA limited loans from 2 to 10 p.m. on April 29 to lending institutions with asset sizes less than $1 billion. In addition, the organization earmarked $60 billion in loans for small lenders, wouldn’t allow public companies to receive loans and said it would audit all loans of more than $2 million. The organization also disallowed the use of robotic processing automation that could let a financial institution submit large numbers of loans at a time.
In the first three days, nearly 70% of all loans approved in the second round of PPP funding had been from small lenders with fewer than $10 billion in assets, the SBA added. By press time, it was not able to break down PPP loans by state. The average loan size was also smaller.o