Second PPP round’s reviews mixed as final deadline nears

With the second round of the Paycheck Protection Program winding down, local lenders are reporting mixed levels of turnout for second-draw loans, which are more targeted toward smaller businesses than their predecessor.

The second draw loans released this round, according to the federal Small Business Administration, are for businesses that previously received a first draw loan and used the full amount for authorized uses, have no more than 300 employees and can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Lloyd DeVaux, president and CEO of Sunstate Bank, said the second round has been “busier than ever” for Sunstate, though the dollar amounts of loans aren’t as high. Businesses that haven’t yet received any loans, he said, could still apply for the first draw in the second round and, if they used the money in time, could even apply for a second draw as well. 

On average, he said, the loans his bank is processing have been about 30% smaller this round. Many of the customers applying for loans, he said, are new clients, but it’s too early to tell if they will stay with Sunstate after the loan process ends.

Rich Helber, CEO of Tropical Financial Credit Union, said this round has been slower than the first as many companies that qualified for first draw loans are now getting back on their feet. 

“It was much less of an event,” he said of this round, which ends May 31. “Maybe a third of the organizations we granted loans to before came back to us the second time.” 

The majority of clients who applied for the Paycheck Protection Program through Tropical, he said, were existing customers, though some first-round applicants were new clients. Whether they stay with the credit union afterwards, he said, is still to be determined, as many are still in the loan forgiveness process. 

Both Mr. Helber and Mr. DeVaux said a third round of loans like the first two is unlikely to happen unless the virus situation gets worse, though Mr. DeVaux said he could see demand for a program more specifically targeting restaurants and businesses in the hospitality industry.

In the second round, he said, the Small Business Administration prioritized lending from Certified Development Companies, Microlenders, Community Development Financial Institutions, and Minority Depository Institutions. According to their website, these are now the only institutions that can lend money until funds are exhausted. 

As a result, Mr. DeVaux said, Sunstate and other similar lenders had a chance to pick up clients from larger lenders that couldn’t participate this round. The prioritization, he said, gave many smaller clients a better opportunity to receive loans, as larger institutions may be prone to focus on clients applying for larger loans.

Overall, he said, the Paycheck Protection Program was a “great program rolled out in record time.”