(The Center Square) – The Small Business Administration and the U.S. Treasury revealed Sunday that the second round of the Paycheck Protection Program has issued 2.2 million loans, totaling $175 billion.
PPP loans are forgivable loans for small businesses to offset some of the losses experienced by the response to the COVID-19 pandemic. The loans are meant to provide a direct incentive for small businesses to keep their workers on the payroll.
The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, signed by President Donald Trump in late March, provided $349 billion for the PPP loans.
SBA had disbursed all of the money in less than two weeks. Round 1 of PPP faced heavy criticism from lawmakers and small business owners because of who received loans and the difficulty many small business owners had in applying for the loans.
Many businesses faced bank delays and struggled with paperwork and red tape.
After it was revealed some of the Round 1 funding was funneled to publicly traded companies – it was reported 15 publicly traded companies with market values of more than $100 million received PPP loans – Treasury issued new guidance on CARES Act funding and said publicly traded companies had to return loans meant for small businesses.
The Paycheck Protection Program and Health Care Enhancement Act was signed by Trump on April 24. It replenished PPP with another $310 billion.
Round 2 loans started being processed Monday. The 2.2 million loans made to small businesses in Round 2 has surpassed the 1.6 million PPP loans issued in Round 1.
“Notably, the average loan size in Round 2 is $79,000, yet another indicator that the program is broadly based and assisting the smallest of small businesses,” SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin said Sunday in a joint statement. “Nearly 500,000 of the loans were made by lenders with less than $1 billion in assets and non-banks. … Over 850,000 loans – about one third of the 2.2 million loans – were made by lenders with $10 billion of assets or less.”
White House economic adviser Larry Kudlow said Sunday on CNN’s “State of the Union” the Trump administration has not made a decision on a third round of PPP loans.
“This has been an extremely popular and effective program, no question about it,” Kudlow said. “Keeping folks on the payroll is so important. And even if they are furloughed for a while, they’ll be picked up by the unemployment compensation. That suggests, I might add, potential strong spring back once the states gradually phase in their reopenings in the transition months of May and June.”
SBA said 5,432 lenders have distributed Round 2 loans. Businesses in California ($33.2 billion), New York ($17.6 billion), Texas ($12.8 billion), Florida ($12.2 billion) and Illinois ($6.6 billion) have received the most money so far.
“SBA systems are processing loans so lenders can disburse funds quickly. We encourage all eligible lenders to participate and all eligible borrowers that need this assistance to work with an approved lender to apply,” Carranza and Mnuchin said. “We are fully committed to ensuring that American workers and small businesses continue to get the resources they need to get through this challenging time.”
Jason Schaumburg is an award-winning, veteran editor who has been a journalist for more than 20 years. He spent a decade as the top editor in three northern Illinois newsrooms for Shaw Media and Pioneer Press.