The new round of the SBA’s Paycheck Protection Program is in full swing in the greater Wilmington area.
Banks, and the agency itself, have profited from their experience with last year’s program to accelerate and improve the experience for everyone involved, according to Jim Engel, president and CEO of Aquesta Bank.
“The process is easier this time than last time,” he said. “Last time, no one knew anything. Some changes have been positive, and it’s more automated than the first time. If there is a business out there that is struggling because of COVID, they really should be looking at this; it can help them survive and get through this.”
The U.S. Small Business Administration has targeted this round’s funding at truly small businesses. To help ensure that the money was available at the community level first, the program rolled out Jan. 11 to Certified Development Companies – the entities that make SBA 504 loans. A few days later, small community banks were given the go-ahead to begin accepting applications. More recently, larger banks like Truist and Wells Fargo were invited to participate.
The agency will offer a program overview webinar Thursday from 9 a.m. to 10 a.m. (details are at the end of this story).
There are two separate pools of money: one for companies that did not receive a PPP loan in 2020 and a second pool for those that did.
According to the SBA website, at least $15 billion is being set aside for so-called “First-Draw” loans. These loans, the agency states, can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 and certain supplier costs and expenses for operations.
At least another $25 billion is available for Second-Draw loan applicants. To qualify for a second loan, these small businesses must:
- Have spent, or have plans to spend, the full amount of the previous PPP loan for authorized uses only;
- Have no more than 300 employees;
- Demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Applications for all PPP loans must be received by March 31, 2021, according to the SBA website.
When the SBA indicated that another round of PPP funding was coming, Dogwood State Bank, a Raleigh-based institution with one office in Wilmington, spent a lot of time on the front end of its PPP lending process to ensure a more streamlined experience.
“We developed a portal with a software firm,” said Mark Johnson, Dogwood’s Wilmington market executive. “There are no paper applications. We were ready a week before [the program] opened and started taking applications Jan. 15.”
As of Monday, Dogwood had approved about $50 million in loans and had another $50 million in applications in its pipeline, Johnson said. It's also teaming up with Raleigh-based accounting firm Thomas, Judy & Tucker, which can walk applicants through the process if they need help. TJT now has a Wilmington office.
Cornelius, North Carolina-based Aquesta Bank also honed its lending technology, automating the application process to allow its staff to concentrate on the more time-consuming review process. But people are still working weekends right now, Engel said Monday.
“We’ve sent out between 300 and 400 applications and have received 160 back. We’ve made about $10 million in loans,” he added. “Those are big numbers for us, and we’ve helped a lot of businesses.”
In the first round of PPP lending last year, both Aquesta and Dogwood worked to secure loans for non-client as well as client businesses. That has paid off for the two community banks.
“We’ve gained about 750 new customers because of that,” Engel said, noting that some non-client applicants came to his bank because they were frustrated with the difficulty of applying through some larger banks. “If you’re a small business owner and [seeing a decline in business], that’s your lifetime earnings. You see it going up in smoke. Not being able to get hold of [a lender] caused a lot of anxiety.”
Dogwood Bank, likewise, “absolutely” saw an increase in clients as a result of last spring’s PPP work, Johnson said.
“There are many businesses out there who have simply appreciated the fact that we were among the first in the market to take applications,” he added.
Wilmington-based Live Oak Bank, the nation’s largest SBA lender by dollar amount, began making new PPP loans when banks of over $1 billion in assets were allowed to do so.
“We are currently participating and are accepting applications. We are in the process of helping current customers apply for their second draw PPP loans and are working diligently to be able to serve more,” bank spokeswoman Claire Parker said via email Tuesday. “We are posting updates to our website to help small business owners get the information they need to prepare and apply for PPP funding.”
Because Live Oak does such a large volume of SBA loans and understands the agency’s electronic processing system, E-Tran, it was one of several lenders asked to help last spring as the federal agency whipped together the PPP on a tight schedule.
Parker said that the bank continues to work with the SBA on policy implementation and tech infrastructure as the PPP evolves. Live Oak has also made some small changes on its end, Parker said.
“There are some adjustments that have been made based on modifications to the program, but we are fundamentally using the same system to accept, review and submit loan applications to the SBA,” she added. “These are understandably challenging times for many, and our teams are working around the clock to ensure customers have the latest information and resources needed to determine if they qualify for additional PPP funding.
“We are also working hard to help customers assess if there are other sources of financing that can help. With enhancements to the SBA program, there are many options right now that are attractive for American small business owners.”
Other Wilmington area financial institutions currently making new PPP loans are Bank OZK, Corning Credit Union, First Bank, First Citizens Bank, Self-Help Credit Union, Southern Bank, TD Bank, Truist Bank, United Bank (formerly CresCom) and Wells Fargo Bank.
To join Thursday's SBA Paycheck Protection Program (PPP) 2021 - Re-Launch Overview webinar, visit https://sbtdc.org/events/sba-paycheck-protection-program-ppp-2021-re-launch-updates/
. Advance registration is needed and involves several steps.