On Monday, the government is set to reopen its flagship pandemic assistance program for small businesses with $ 284 billion in new funds and revised rules aimed at obtaining funds from companies most in need while eliminating fraud and abuse.
The Small Business Administration announced Friday that it will launch a third round of its Salary Protection Program this week, starting with small community financial institutions on Monday, and larger lenders in the coming days.
By prioritizing smaller lenders, the Small Business Consortium hopes to address lawmakers’ criticism that minority-owned and women-owned firms did not make enough money during the first two rounds of public-private partnerships last year compared to larger companies.
Administration officials told reporters on Friday that they expected the funds to be sufficient to meet the demand.
Under the program, lenders on behalf of the government distribute loans that can be forgiven provided funds are spent on eligible costs, such as payroll and rent. To date, the PPP has distributed $ 525 billion through more than 5 million loans.
Congress approved the new money last month as part of another pandemic stimulus package, which also relaxed public-private partnership rules about who can get the cash and what can be spent on it.
Among the major changes, companies that took in cash during the first two rounds will be allowed to have a PPP loan second on the condition that they show a 25 percent impact on their revenue. To address concerns about fraud, the SBA is also introducing new due diligence checks.
While lenders say the changes are positive, some are concerned that they may cause some initial hurdles, especially since updated application forms and SBA rules directive were not released until Friday.