There is reason to be optimistic about another appropriation to fuel both the Paycheck Protection Plan (PPP) loan program as well as the Economic Injury Disaster Loan (EIDL) program as Senate leaders and the White House worked over the weekend. It’s looking like somewhere close to $300 billion will be further allocated for the PPP along with another $70 billion for the EIDL. If the sentiment from both Senate and White House spokespeople expressed overnight and this morning is right, additional COVID-19 relief for small businesses is not that far off.
Additionally, there’s reason to believe that many of the smaller small businesses that were left out of the first round of the PPP and the EIDL may have a better opportunity to see success this time around.
Update: April 21, 2020: We expect over $300 billion in additional PPP funds this week. We have multiple lenders accepting applications and they are ready to move forward as soon as additional funding is approved. With multiple SBA approved lenders and partners we are able to help more small businesses apply for the funding they need. Get matched to a PPP lender instantly with Nav.
In addition to the banks and other traditional SBA lenders that participated in round one, the Treasury and SBA are allowing more online lenders and other fintech financial institutions to participate in what appears to be a future second phase of additional COVID-19 relief for small businesses. I think this is good for many of the small businesses that were left out of the first round.
Why Online Lenders and Fintech Institutions Entering Round Two is a Good Thing
Let me acknowledge up front that I work for Nav, a fintech that was helping match small businesses to PPP financing since the beginning of the loan program. With that in mind, I think there are several reasons why engaging more online lenders and other fintech partners is a good idea:
- Your status as an existing banking customer won’t matter. Many of the small businesses that found success were already customers of the banks making PPP loans. That will likely be a non-factor with any of the online lenders entering the field over the coming weeks. They will be looking for new customers and an opportunity to build new relationships.
- Most online lenders are already servicing smaller small businesses. In other words, if you have less than 20 employees—or even none other than yourself—these lenders are used to working with businesses like yours and are better equipped to help shepherd your application through the lending process. In fact, we saw our partners approving PPP loan offers of $50,000 or less; which tells us they are approving many smaller businesses like sole proprietors or those with fewer employees. This bodes well for Main Street, at least in my opinion.
- Unlike more traditional SBA lenders, these lenders are better equipped to accept an online application and respond quickly. This was a bottleneck for many traditional lenders and a frustration for borrowers during the first round of PPP financing. Putting an application online is not the same thing as having an online application—which was one of the challenges these traditional lenders faced with the online nature of many of the PPP loan applications.
- Online lenders and fintech institutions are ramping up. I can’t foresee any scenario where the federal government doesn’t make more aid available—sooner, rather than later. I get the impression from others in the space that they feel the same way. And, they are encouraging their customers to either finish their applications or get a new application started so they are better prepared to take advantage of the next round of financing available through another appropriation of the PPP loan program. Whether you are a Nav customer or not, I would advise you to do the same.
From the Senate, to the House, and then the President’s Desk
Like you, we’re watching this legislation closely and anticipate this happening in days, not weeks. Once the bill for additional COVID-19 relief for small businesses leaves the Senate, the House will then vote, and submit it to the President for his signature. Although I’m neither a sorcerer nor do I have a crystal ball, I don’t believe it’s unreasonable to expect this appropriation will be available this week—once the legislative wrangling is complete. I also expect it to overwhelmingly be supported by both Houses of Congress.
There is no question that the first round of PPP funds fell short for many small businesses. Fortunately, it was pretty obvious to everyone that the program ran out of money before the smallest small businesses were able to get their applications processed. Like you, there are many of us that were also frustrated when that happened. With that being said, we are optimistic today that there will be funds made available for your businesses and many more small businesses will be helped with PPP funds.
We’re all in this together.
Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors. To review your real-time funding options with one of Nav’s lending experts, please contact us.
This article was originally written on April 20, 2020 and updated on April 21, 2020.