Round two of the Paycheck Protection Program (PPP) opens this morning at 10:30am ET. If you thought round one was a little crazy wait until you see how wild the next couple of days are going to be.
Congress approved $484 billion in additional coronavirus relief that was signed into law by President Trump on Friday. Of this money $320 billion has been allocated to the PPP, of which $60 billion will be set aside for smaller lending institutions.
The Challenges of Round One of the PPP
When the PPP launched on April 3 very few lenders were ready and there were many problems, that was to be expected with such a new and massive program. Many small businesses were shutout because their bank couldn’t or wouldn’t accept their application. By the time they did it was too late. Another big problem was that hundreds of millions of dollars went to large companies, some of them public, that have access to other forms of capital. For millions of small businesses the PPP was their only option. There were several other problems, many of them detailed in this recent in depth piece in Business Insider.
So, now we move to round two. Some of these problems have been addressed with Congress allocating $60 billion of the $320 billion to two tiers of smaller lending institutions. There is $30 billion for banks with between $10 billion and $50 billion in assets and $30 billion for banks with less than $10 billion in assets (this latter category also includes CDFIs and credit unions). But there is no money earmarked for fintech lenders. Or even money targeted directly towards the smallest businesses.