The $349 billion of initial funding to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) ran out in only two weeks. With the intention of further help to small businesses through the COVID-19 crisis, the SBA began the second round of PPP on April 27th, adding $310 billion to the loan program. The second round of PPP funding has lasted longer than the two weeks it took for the first round to run out. As a small business owner, here are some updates you need to know about the second round of PPP.
Money remains available after two weeks
Considering how quickly the first round of funding was depleted, many experts predicted that the second round of funding wouldn’t last for more than two weeks. Before the release of the second-round money, Chase announced that it had a massive backlog of applicants. It warned its customers that they might need to seek help from other channels. However, according to the SBA, almost 40% of the total funds are still available by the end of last week. Small businesses that still need money to cover their payroll can apply for what remains of PPP’s second-round funding allocation.
Loan sizes are smaller
The first round of PPP provided 1.6 million loans using a total allocation of $349 billion. By the end of last week, the SBA indicated that there were 2.5 million loans for the second round with only $188 billion used. The increasing number of loans with a lesser amount of money used demonstrates that the average loan size is smaller. According to the SBA PPP Second Round Report, the average loan size of the first round is more than $218,000, compared with $73,000 on average in the second round of funding. The decreasing average loan size in the second round of PPP tells us that smaller businesses are obtaining funding.
Unqualified companies need to return their loan
As we mentioned earlier in our blog post More Funding Approved for the Paycheck Protection Program, only small businesses with 500 or fewer employees can apply for PPP. Small companies are angry because some large companies received their PPP funding while small businesses are still waiting for approval. To solve this problem, the SBA announced that large companies who are unqualified should return their funds. The deadline for returning PPP funds is May 14th. If unqualified companies do not return the PPP loan before this date, they would face a penalty. This loan return policy will ensure that companies that truly need the PPP funding can receive the money.