PPP Loan Program Reopens This Week With Revamped Rules

Local community banks are helping small businesses navigate the application process to apply for desperately needed funding

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The Small Business Administration is reopening its Paycheck Protection Program this week, with some revamped rules and guidelines.

It comes after the $900 billion COVID-19 relief bill passed just before the new year, with $284 billion set aside for businesses desperate for help.

The new PPP funds give those that weren't approved last year another chance to apply and allows businesses that exhausted previous PPP money to apply for a second draw.

NBC 5 spoke to John Steinmetz, the CEO of Vista Bank, one of the top 25 Dallas-based banks making PPP loans during the first round.

He said his team, like many community banks across the country, are starting to work overtime to help businesses get their applications together. Vista Bank is posting a number of resources for all business owners on its website, including this spreadsheet of important information from Independent Bankers Association of Texas.

“So many small business owners have risked their entire life savings in an attempt to keep their employees and their team and families off the unemployment line,” he said.

The SBA announced that it is prioritizing applications from smaller community banks right now to start and larger lenders in the coming days, with an emphasis on helping minority, women and veteran-owned businesses.

There’s a $2 million cap per business this time, as opposed to $10 million last year.

“I know one thing that a lot of small businesses were really concerned about in the last iteration of this, was that the funds went really quick,” Steinmetz said. “I think that having these caps in place and the technology is going to allow us to hopefully be a little bit more efficient.”

Steinmetz helped us break down who is eligible apply for round two:

  • While first draw recipients are grandfathered at 500 employees, second draw recipients are now capped at 300.
  • Businesses that qualified and received a previous PPP loan last year must have used or will use all of those funds before the disbursement of the second round.
  • While loan forgiveness of funds from round one is not required at this point to qualify for round two, it is encouraged
  • Second draw applicants must prove a 25% revenue loss in any quarter in 2020 either on a quarterly or annual basis.
  • Businesses must have been in operation prior to Feb. 20, 2020. Seasonal employers may be exempt.

Once approved for a round two PPP loan:

  • 60% of the money must be applied to payroll.
  • The rest can be used on operational and pandemic related expenses they've incurred like PPE, new technology, plexiglass, new drive thru windows and other safety measures.
  • It can even be used toward costs related to property damage or loss from the protests last summer that weren't covered by insurance.
  • Borrowers can set their coverage period between 8 and 24 weeks.
  • The loans are tax-free.

The new program is currently set to expire March 31 or when the appropriated $284 billion in funding runs out, similar to what we saw during the program’s first round. Steinmetz said businesses should apply as soon as possible.

“A lot of this will seem overwhelming but I can assure you that banks everywhere will be prepared to explain this process,” he said. “We are thrilled to work with anyone, business size does not matter. This is a very small way of us being able to get back to North Texas and we think that we’re going to be able to help them expeditiously get this process through.”

Vista Bank has some really helpful tools and resources on their website to help North Texas small business owners navigate the program. Click here for more information.

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