The deadline for businesses to apply for a Paycheck Protection Program loan was quickly approaching its end, but swift intervention by lawmakers has granted business owners and the U.S. Small Business Administration more time.
The second round of the PPP loans began on Jan. 11 of this year with March 31 slated to be the deadline, but it has been extended through May 31.
The first draw of loans started in April and ended in August of last year.
A PPP loan is intended to offer a direct incentive for small businesses to keep their employees on their payroll and to allow them to stay afloat during these unprecedented times.
“The PPP loan has directly had a positive impact in our organization to continue to be a resource for our business partners,” President and CEO of RGV Partnership, Sergio Contreras said. “It allows us to continue to maintain a payroll and other administrative components of the organization but overall, it allows us to continue to support our communities across the four-county region.”
Last week, the House of Representatives voted almost unanimously, 415 to 3, on the PPP Extension Act of 2021 which extended the application time limit from March to May and gave the SBA until June 30 to finish processing applications for loans.
A few days after passing in the House, the Senate voted 92 to 7 and sent the bill to President Joe Biden in order for the bill to be signed into law.
In addition, Biden’s $1.9 trillion American Rescue Plan included $7 billion in additional funding for the SBA as well as other provisions to further aid small businesses.
As of March 21, the number of PPP loans granted in Texas totaled to 236,518, amounting to over $15 billion.
Locally, the SBA has guaranteed over 3.1 million PPP loans totaling $196 million. Loans for the second round averaged around $63,000 and about 76% of the loans have been for $50,000 or less.
Within the 14 counties that the Lower Rio Grande Valley District Office of the SBA oversees, they have granted almost 11,000 PPP loans, which is a little over $617 million.
Of the estimated $617 million, Hidalgo County has received about 38% of those funds with Willacy County receiving .32%, Cameron County with about 18% and Starr County with 1%.
“When you look at the amount of loans and the amount of money, it’s phenomenal,” District Director of SBA’s Lower Rio Grande Valley District Office, Angela Burton said. “In the past, the district itself might push out 150 loans a year but looking at PPP, we’re already at 11,000 loans so far.”
In order for a business to apply for a PPP loan within the SBA’s Lower Rio Grande Valley District, they would have to go directly to one of the 215 lenders — including community-based lenders such as Lone Star National Bank, Texas National Bank, International Bank of Commerce; or some of the larger lenders like Wells Fargo, BBVA Compass, J.P. Morgan or Bank of America.
For eligibility, the business would need to comply under the SBA’s size standards, meaning they have to be considered a small business.
For different organizations or business structures, such as sole proprietors, independent contractors, people who are self-employed as well as business entities like partnerships and corporations can also apply.
These types of businesses were eligible since the first round of PPP loans but in the second round, the SBA opened the eligibility to more businesses like housing cooperatives, destination marketing organizations, chambers of commerce and economic development organizations.
The process of approval did tighten up after the first round due to issues of people trying to take advantage of the loans, which was a result of the program being put together in such short notice.
“Between [SBA] and the IRS, we put together these rules very quickly so that money and funding could get out to people as quickly as possible,” Burton said. “But some folks took advantage of that, so when the second round came around, there were protocols put in place to try to lessen those that did not qualify.”
It’s important to note that the loans can also be fully or partially forgiven.
Approved businesses would have to follow the SBA’s forgiveness terms such as having 60% of the proceeds being spent on payroll costs.
Additional information about the PPP loans and loan forgiveness can be found on the SBA’s website at sba.gov.
With the second round of loans being more inclusive and over 11,000 loans in less than three months in the Valley, the SBA and lenders have plenty of work ahead of them.
