More small lenders in Arkansas will gain access to the federal Paycheck Protection Program beginning today and the initiative will expand to include banks of all sizes early next week.
The U.S. Small Business Administration, which is administering the $284 billion program, announced the expansion plan Thursday. Arkansas lenders with assets of $1 billion or less can begin submitting loan applications on behalf of their small-business clients today at 8 a.m.
All lenders -- with no cap on assets or size restrictions -- can send in loan applications beginning Tuesday.
"This second round of Paycheck Protection Program funding is critical to helping Arkansas small businesses keep their doors open, save jobs, and support hard-working families across our state," said Edward Haddock, SBA's Arkansas district director.
Limiting access to small lenders through this week will help direct loans to minority-owned and veteran-run businesses, according to SBA officials.
"Our trusted lenders are crucial to delivering PPP funding to our underserved businesses who need assistance the most during this challenging year," Haddock said in a statement.
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Bankers in Arkansas are ready to spring into action.
"Arkansas' banks welcome the restart of the Paycheck Protection Program," said Lorrie Trogden, president and chief executive officer of the Arkansas Bankers Association. "Just as they did at the start of the pandemic and have continued to do, banks of all sizes across the state stand ready to help struggling small businesses gain access to much-needed critical funds."
The Paycheck Protection Program, which began last spring to provide financial aid to small businesses, was revived on Monday when SBA opened its lending portal to small financial institutions focused on making loans to underserved banking customers and to first-time program borrowers.
When the program expands Tuesday to include all banks in the nation, rules for borrowers remain the same.
Small businesses that received Paycheck Protection Program funding last year can apply for a second loan only if they have fewer than 300 employees and only if they demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The maximum amount of a second program loan is $2 million.
Those limits do not apply to first-time borrowers; they can have up to 500 employees and borrow $10 million.
This lending cycle also has been expanded to include 501(c)(6) organizations such as chambers of commerce and trade organizations. However, those groups are limited to 300 employees or fewer and can borrow only up to $2 million.
The SBA also is allowing more flexibility in how small businesses can use the loans in this round of Paycheck Protection Program funding. Previously, loans were made primarily to cover payroll expenses and rent and utilities.
Now, funds can be used to cover additional costs and expenditures, including operational expenses, property damage, supplier costs and spending on worker protection efforts such as drive-thru areas, ventilation and sneeze guards.
"A second round of PPP could not have come at a better time, and the SBA is making every effort to ensure small businesses have the emergency financial support they need to continuing weathering this time of uncertainty," SBA Administrator Jovita Carranza said Thursday in a prepared statement.
Also Thursday, the SBA announced that it has forgiven more than 1.1 million Paycheck Protection Program loans valued at more than $100 billion. The agency said it has received 1.3 million forgiveness applications for about $170.5 billion. For the smallest borrowers with loans up to $50,000, 88% have been approved for forgiveness.