After a politically charged delay, the U.S. Small Business Administration is expected to open the flood gates late this week or early next for most Spokane-area banks to secure more stimulus money for struggling businesses.
While much of the next version of the Paycheck Protection Program will remain the same, government regulators made some tweaks for who can apply and for how much. The bottom line, however, is that many of the same small businesses that obtained grants before can do so again.
“We anticipate that this will be opened later this week or the first of next week,” said Jack Heath, president and chief operating officer of Washington Trust Bank. “We are telling our clients to let the information releases come out this week … so we can maximize the number of dollars our clients have available to them at this challenging time.”
The initial PPP loans, which mostly are being converted to grants, were made available under the original CARES Act targeting businesses with 500 or fewer employees.
The new funding will be available only to those businesses with 300 or fewer employees and only those businesses that are not publicly traded.
Businesses that received PPP funding the first time are eligible to receive more money as long as they can show a revenue drop of 25% from any quarter in 2019 to the corresponding quarter in 2020, said Greg Deckard, CEO and chairman of State Bank Northwest.
Businesses that qualify can get more funding. “You just have to demonstrate that you used all those funds before you apply for the second round,” he said.
The next phase will put an emphasis on helping restaurants and hospitality businesses, which suffered some of the worst revenue and job losses of any sector of the economy.
In the first round, businesses could seek PPP loans of two-and-a-half times their monthly payroll. That formula remains, except for restaurants and hospitality businesses that can now received three-and-a-half times their monthly payroll under the new round, Deckard said.
“We see a lot of people are anxious and need working capital,” Deckard said. “It’s unfortunate. I’m sort of disappointed with these changes that they couldn’t have been put out three or four months ago.”
The latest round of the PPP got delayed as political leaders from both parties argued over how much stimulus was needed. Congress finally passed the $900 billion package in late December, which included $600 direct payments to most Americans and $284 billion for the next round of PPP.
As the pandemic slammed the U.S. economy, the SBA processed some $522 billion in 2020 through the PPP, of which more than half went to 5% of recipients.
The latest round has less money available and demand for the funding is expected to be high, said Dan Hansen, spokesman for Spokane Teachers Credit Union. STCU sent out letters Dec. 29 to all of its business partners informing them of the changes in the program.
“We are definitely getting calls,” Hansen said. “We completed more than a 1,000 of these in 2020. We’ll be ready to do it again in a week or so.”
All three bank officials said the process should go much faster, especially for those business owners who worked with lenders during the first round of funding.
Heath, of Washington Trust, said his institution processed about 5,100 loans and obtained about $1.3 billion for Spokane-area businesses in 2020.
“Although it’s hard to forecast, we expect the demand to be down significantly because of the limitations on the loan amounts and the year-over-year sale decline,” he said. “But we are not sure.”
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.