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PPP’s 2021 return offers second loan opportunity for small businesses, and more time to prepare

M&T Bank's Chris Nichols talks about opening day, round 2, and what the lender has learned.

14th Street, NW at night. (Photo by Flickr user Ted Eytan, used via a Creative Commons license)

This editorial article is a part of What's Next for the Economy? Month of's editorial calendar.

Update: Figures from M&T Bank's first two days of processing second-round PPP loans have been added. (1/21/21, 1:46 p.m.)

The Paycheck Protection Program (PPP) is now fully reopened. As of Tuesday, all lenders could offer loans through the U.S. Small Business Administration program that is designed to help firms weather the pandemic.

Following Congress’ $284 billion appropriation for PPP in its latest COVID-19 relief package, businesses that previously received one of the forgivable loans in 2020 can apply for a second draw in 2021. This option for a second loan is available for businesses of fewer than 300 employees who show a 25% decline in gross receipts when comparing a quarter in 2020 to the same quarter in 2019. (Requirements vary for first-round draws.)

With businesses getting ready once again, the reopening might rekindle memories of April 3, 2020, when the program opened for the first time. With the CARES Act just days old, that led to a scramble as the banks that were facilitating loans and the businesses applying for them figured out a new program that was still being built. With the program being advertised as first-come, first-served, it also led to a push by businesses to get in line fast.

This time, there has been a chance to make some changes. For one, Congress made a move to open the program first to CFDIs and minority-owned lenders, as it sought to provide more access to minority and women-owned businesses that faced big disparities in the first round.

With the second time around, there’s also room for changes for those who are processing the loans.

M&T Bank approved more than 3,000 loans for $560.8 million for businesses in the Greater Washington region in the first round, supporting more than 55,000 jobs. Chris Nichols, M&T Bank’s business banking market manager for Greater Washington, said that there was more time for his team to prepare this time, since Congress passed the bill in late December but didn’t open the program for a few weeks. There was more time to dedicate staff, hold virtual trainings and prepare the technology to align with the reworked program.

“We felt much better prepared this time around,” Nichols said. “We’ve taken the approach this time of going all-hands-on-deck right from the get go. … Everybody and anybody in our organization was trained and ready to go to help process this for our clients.”

M&T Bank also followed Congress’ lead in making a change that can increase access. The bank is allowing business owners to open a new checking account, and then become eligible for a loan later that day, Nichols said. In the 2020 launch of the program, it quickly became apparent that a prior banking relationship was key in securing a loan. Along with preparing its own team, M&T Bank has also sought to engage with local chambers of commerce and community organizations to spread awareness of the program.

So how’s the volume been? After two days, the bank said it processed 10,000 completed applications for $1.5 billion in funding across its entire footprint covering the Northeast and mid-Atlantic. Following trends of the first round, when it processed $7 billion in loans from 35,000 clients, it expects the activity to slow down in the coming days.

“It wasn’t the same demand as the last time around and what we’re seeing so far is the majority of the applications are businesses that applied for the funding last time,” Nichols said.

If a business does secure a loan, the next step is forgiveness. That’s also a process the bank has now been through with many clients. Overall, M&T Bank has now processed about 15,000 forgiveness applications.

Nichols advises businesses to keep the funds received from PPP in a separate account, so that it’s easy to show that they were used for the required purposes, such as payroll.

“Keep it organized, keep it separate, keep it very clear and that will make your life easier when it comes to forgiveness,” he said.

Companies: M&T Bank / U.S. Small Business Administration
Series: What’s Next for the Economy? Month 2021

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