The federal government restarts the small business lending program with a focus on minority-owned businesses, while cities and companies begin their own targeted loan programs to fill in the gaps
On January 11, the PPP program resumed with $284 billion in new funding for small businesses, with a head start for lenders specializing in underserved borrowers. The improved PPP program has new regulatory guidance by the SBA and the U.S. Treasury Department meant to address previous criticisms of the program in order to “better target truly small businesses, particularly those owned by minorities and companies located in low income areas,” according to Forbes. This next wave of lending will roll out first through specially designated community institutions, with additional lenders to follow.
Businesses severely impacted by months-long COVID shutdowns – like those in the restaurant and retail sectors – will be able to apply for second loans. Those seeking a second-round of funding will need to be prepared to show a 25% drop in quarterly gross receipts over 2019 or 2020. Further, stricter regulations have been enacted to prevent mid-sized public companies from dipping their hands into the pot meant for struggling for small businesses, those without the advantage of access to capital markets or the reserves that larger companies do.
In addition, local funding is on the rise to provide additional help for small businesses stretched thin by the pandemic. Wells Fargo is donating $2.5 million to help Philadelphia-based small businesses impacted by Covid-19 and the summer’s civil unrest. The money earmarked in the Open for Business fund will be distributed by community development financial institutions or CDFIs. In San Francisco, Mayor London Breed has unveiled the city’s $62 million plan to help small businesses. Through cost-cutting measures and budget reprioritization, the city will now offer a series of “grants and very low to zero-interest loans will triple the total direct financial support for small business during the pandemic.”