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Businesses can now apply for a second PPP loan. Here’s how it’s going so far

The program is back up and running after tweaks from Congress. The region's largest lender in 2020 isn't seeing as much demand this time around.

Baltimore views. (Photo via Wiki Creative Commons)

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

Updated to include M&T Bank's local loan data for Baltimore. (8:53 a.m., 1/22/21)

Among the things from 2020 that are continuing into 2021: the Paycheck Protection Program.

Congress passed a new round of relief funding in December, including $284 billion for the U.S Small Business Administration (SBA) program, which is designed to serve as a bridge to keep employees on payroll and other expenses covered during the economic slowdown caused by COVID-19.

With the latest reopening of PPP, businesses that received one of the program’s forgivable loans last year can apply for a second loan. To be eligible for this second round, those businesses must have fewer than 300 employees, and show a 25% decline in gross receipts between comparable quarters in 2019 and 2020. (Requirements vary for first-round draws.)

The SBA opened the program again last week, first making loans available through lenders such as community development financial institutions and minority-owned lenders that were more likely to serve women and minority-owned businesses who were shut out of the program last time amid a chaotic opening. On Tuesday, it extended to all lenders.

Demand is ‘not as robust’

Among those that opened Tuesday was M&T Bank, which its leadership says processed the most loans in the Baltimore region in 2020 with 6,800 loans for $1.3 billion.

“We’re seeing significant interest in the program,” Augie Chiasera, M&T Bank’s president for the Baltimore and Chesapeake regions. “A majority of the applications that were received are coming from repeat PPP clients,” meaning those who received a loan in 2020.

The initial opening of the program in April 2020 was a big moment. Coming in the early days of the pandemic-caused shutdowns and soon after Congress passed the CARES Act, businesses rushed to apply for a first-come, first-served program. It ended up running out of money. While there was only one day of evidence when Chiasera spoke to on Wednesday of this week, M&T wasn’t seeing the same kind of influx.

“The demand and pace that we saw [Tuesday] was not as robust as when PPP first launched,” he said.

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. As of Friday morning, it processed 2,100 loans for $275.8 million in Greater Baltimore. Following trends of the first round, it expects the activity to slow down in the coming days.

Chiasera isn’t that surprised by the slower demand. The bank had many clients who were able to access loans in the first round, and others who were able to adapt to weather the pandemic. This time, M&T Bank data so far shows that about 15% of the applications are for first-time borrowers in the program.

Still, the bank was ready. The team made preparations ahead of time, redirecting employees to serve PPP.

“We were really well served by creating what we call a PPP factory in the back office made up of some of our front-line bankers, and we took that same approach with this phase of the program as well,” he said, speaking of the bank’s dedicated virtual team for PPP. “It works well because having individual bankers who interact regularly with clients, understanding their unique needs and processing those requests on the back-end allows much smoother operations for the client.”

‘I wanted to act fast’

Among the clients seeking a second loan with the reopening was Kapowza. Since receiving a loan last year, the Canton-based creative agency has added digital capacity. But there has been a continued slowdown in its production business, which involves filming and creating TV commercials.

“Our production business has really been hit the hardest by all this,” said Dan Schepleng, the agency’s president. “As you could imagine, it’s pretty tough getting folks together to film in this environment. A lot of remote events are happening, but that’s not really our specialty. It’s slowly starting to come back, as people have been figuring out how to film safely.”

Schepleng said he learned about the latest opening of the program, and what would be needed from M&T Bank.

“I got all of the information together in just a few days before and was able to breeze through the form the morning it opened up. I wanted to act fast just because I’m not sure how much each bank is allotted,” he said. “I do think it should go to bars, restaurants, anyone that is required to work in large groups of people. There are surely businesses that need it more than us.”

When it comes to getting the loan forgiven, Schepleng said he got helpful advice to keep the PPP funds in a separate account, tap it only for payroll and document how it was used.

The latest round comes at a time as businesses continue to struggle. In Maryland, state data released Thursday showed unemployment claims spiked over 20,000 for the second straight week, continuing a trend not seen since June. Congressional leaders have said they intended this latest bill to be a “bridge” as the pandemic shutdowns continue. Whether that’s a bridge to a time when society can reopen or a bigger relief bill that newly inaugurated President Joe Biden is proposing remains to be seen. But in the meantime, we’ll continue to watch if a reworked PPP can be more effective in getting loans to the businesses who need it.

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

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