Loans in the second round of the Paycheck Protection Program have already surpassed, in about 10 days, what the first round did in two weeks.
And the Great Lakes Region of the U.S. Small Business Administration is leading the way, having doled out some $22.8 billion on nearly 308,000 applications from small businesses and nonprofits. The second round of PPP funding re-opened on April 27, 2020, after the first round of funding, which opened on April 3, was exhausted on April 16.
While the total amount loaned is impressive, Great Lakes Regional Coordinator Rob Scott is happier with the total number of loan applications the second time around, which exceeded the number of applications in the first round by nearly 10,000 loans.
“It is all good with total dollars that have been approved … it’s a wonderful number,” Scott said. “What I’m focused on is the number of PPP applications that have been approved. That says how many businesses and non-profits have gotten a lifeline for these forgivable loans.”
Michigan is second in the Great Lakes Region – which also includes Illinois, Indiana, Minnesota, Ohio and Wisconsin – behind only Illinois in both total loans (60,373) and money doled out (nearly $5.6 billion). Michigan had some 43,000 loans for $10.3 billion the first time around.
Overall, the Great Lakes Region is responsible for 606,000 loans (tops in the country) totalling $88 billion (second in the nation), according to Scott.
And, unlike what happened in the first round, when funding ran out after exhausting its $349 billion pot in 13 days, there’s still some $135 billion in the pot right now, Scott said. That’s because the average loan in the second round (some $76,000) is coming down from Round 1 (a little more than $100,0000).
“The average is coming down,” Scott said. “That means we helped a lot of larger small businesses (the first time), and in this second round we’re hitting more of those smaller businesses, those mom-and-pop shops around your communities.”
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The loans are designed to help small businesses meet payroll and other expenses, and are forgivable if the program’s parameters are met. But some businesses are running into an issue where employees don’t want to come back because they’re making more money on unemployment.
Dan West, president of the Livonia, Mich., Chamber of Commerce, told Corp! Magazine last week he’s hearing from business owners there are “a lot of concerns” about workers coming back, particularly among restaurant owners.
“Restaurants had to lay off all their wait staff, so a lot of them have taken jobs at Amazon, Walmart, what have you, and may not come back,” West said.
While there are fears that workers not coming back from layoff may threaten the PPP loan forgiveness, the SBA’s Scott said guidance will be coming on that question.
“There’s going to be some additional guidance needed. When legislation was passed we couldn’t envision everything,” he said. “We’re going to do everything we can to make sure that small business owners can weather the pandemic and when they’re able to open their doors they can hit the ground running.
“We do not want to hurt that small business owner in the process and put them in a situation where they’re not successful,” Scott added.
Nationally, the SBA has approved 2.2 million PPP loans in the second round, surpassing the first-round total of 1.6 million PPP loans in just one week. The average loan size in the second round is $79,000 (the first-round average loan size was $206,000).
Since the PPP’s
launch, the SBA has processed more than 3.8 million loans for more than half a
trillion dollars of economic support in less than one month. More than 15%
of the overall national PPP loans and dollar amounts has been approved for the
six states in SBA’s Great Lakes Region.
“The Paycheck Protection Program is providing critical support to millions of small businesses and tens of millions of hardworking Americans,” SBA Administrators Jovia Carranza and U.S. Treasury Secretary Steven Mnuchin said in a joint statement.