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Banking & Finance

Some Of The Latest News On The PPP, Disaster Loan

By Jenny Callison, posted Aug 7, 2020
Two programs offered by the U.S. Small Business Administration in­tended to help keep small businesses afloat during the current economic downturn are seeing changes. One has already ended; the other is ap­proaching an expiration date.
 
The Economic Injury Disaster Loan (EIDL) Advance program, “provided U.S. small businesses, nonprofits and agricultural business­es a total of $20 billion in emergency funding,” before expiring July 11, the agency stated in a news release.
 
The Advance program was de­signed to provide funds quickly to affected businesses and nonprofits to sustain them until they were ap­proved for a regular EIDL.
 
The EIDL program provides economic relief to businesses experi­encing a temporary loss of revenue due to COVID-19. EIDL proceeds can be used to cover a wide array of working capital and normal operat­ing expenses, such as continuation to health care benefits, rent, utilities and fixed debt payments.
 
While the EIDL Advance program has ended, small businesses that have been adversely affected by the coro­navirus can still apply for a regular EIDL.
 
The second program, newer and perhaps better known, is expected to expire Aug. 8. That’s the Paycheck Protection Program, authorized in March as part of Congress’ CARES Act and assembled quickly by the U.S.
 
Department of the Treasury un­der Secretary Steven Mnuchin. The first loans were made in early April.
 
Funded in two rounds for a total of $660 billion, the PPP had dis­bursed nearly five million loans worth more than $518 billion as of July 21, according to a Treasury report. Those loans were processed by 5,455 SBA lenders across the country.
 
One of those lenders is Live Oak Bank, the nation’s largest SBA lender by value of loans. Not only was the Wilmington-based bank an active participant in making PPP loans; it also worked with Treasury to design the program.
 
“Mnuchin’s Treasury [staff mem­bers] were the architects on this,” said Live Oak’s Chairman and CEO James “Chip” Mahan. “The question was how to distribute a third of a trillion dollars. Because we are the largest SBA lender, we are familiar with the SBA’s E-Tran [Electronic Loan Processing] system. Our people know more about it than most [other lenders].”
 
And when the program launched April 3, Live Oak was ready to make PPP loans. As of July 23, the bank had lent more than $1.7 billion to more than 10,000 borrowers nation­wide, including to 723 businesses and organizations in the Wilmington area.
 
As of July 21, 123,523 North Carolina entities had received PPP loans with a combined worth of $12 billion from an array of lenders, ac­cording to the Treasury report. SBA data on loans of more than $150,000 show about 587 such PPP loans were approved to businesses and organiza­tions in New Hanover County, more than 130 in Brunswick County and about 50 in Pender County. Informa­tion on loans of less than $150,000 is not included in the database.
 
As of press time, Congress was still considering a measure that would allow certain businesses to borrow from the PPP a second time. The item is included in the Senate's latest coronavirus relief funding proposal.
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