SACRAMENTO, Calif. — The Paycheck Protection Program just got a $310 billion cash infusion to help support small businesses during the coronavirus pandemic.
This is a replenishment of funds after the first roll out of the program ran out of money within two weeks of its April 3 launch.
"There were 80 publicly traded organizations that maybe didn't need the money that got some PPP funds," said Virginia Varela, CEO and President of Golden Pacific Bank in Yuba City, Sacramento and Live Oak.
Varela explains that those big corporations put smaller businesses at a disadvantage when it came to access to funds. Furthermore, Varela says that the bigger banks benefited from the move because larger loans generate a larger fee income — or profits — for banks.
"This time we're going to do carve outs and put money in the hands of those lenders who are most easily working with those businesses we need to reach," Varela said. "For example, our average loan size in about 90 loans over three days was about $120,000 which is a lot lower than the type of loan a big corporation would seek."
That's what went wrong the first time around, and the carve outs to smaller banks and credit unions aim to ensure more legitimate small businesses get access to Paycheck Protection Program funding.
So what can you expect this go round?
Varela says expect the money to run out fast again, so act fast.
"You're just not all going to get the funds. That's unfortunate," Varela said. "But I would also say that there's other opportunities that will be coming up. But for now, the faster you can get your application in and get a relationship going with a participating lender, the better for you."
If you still need to apply to get help for your small business through the Paycheck Protection Program here are a few tips:
- You'll need your 2019 tax returns, proof of payroll, and the IRS Form 944, among other documentation.
- Only one PPP loan is issued per business, so don't try to submit more than one application or you may get flagged for fraud and that could slow the process down even more.
- Applications are available at 7:30am PST on April 27, and the money will run out fast. So act quickly.
Follow the conversation on Facebook with Keristen Holmes.
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