The Biden administration has approved a dedicated time period (February 24-May, 31 2021) for the smallest businesses to apply for and receive PPP loans. Additionally, the formula for calculating loan maximums has changed to allow businesses greater access to funds beginning the last week of March.
Applications are currently open. Start your PPP application now.
When the CARES Act was passed on March 27th, we knew that PPP loans would be in high demand (SBA’s Paycheck Protection Program). Small businesses are among those who have been hit the hardest by the COVID-19 crisis, due to complete restructuring of day-to-day operations.
At Divvy, we worked tirelessly to build an all-digital PPP loan portal so that small businesses could get their applications as close to the front of the line as possible. We worked with customers and non-customers alike and have already seen many SBA approvals.
Current status of PPP funding
On April 15, 2020, Treasury Secretary Mnuchin and SBA Administrator Carranza made a statement regarding the current funding provided by the SBA and the need for additional funds. They stated that the SBA had “processed more than 14 years’ worth of loans in less than 14 days” and would not be able to issue new loan approvals once the PPP and EIDL programs experienced “a lapse in appropriations.”
“We urge Congress to appropriate additional funds for the Paycheck Protection Program—a critical and overwhelmingly bipartisan program—at which point we will once again be able to process loan applications, issue loan numbers, and protect millions more paychecks.”
As of this morning, the SBA’s loan program had committed all funds currently available under the CARES Act funding. The SBA’s PPP website features this notice:
“The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.”
What this means for small business owners right now
As the PPP program was first-come, first-served, small business owners have been rushing to submit their applications. The announcement that funding is no longer available has generated great uncertainty among business owners waiting to hear on the status of their PPP applications.
Congress is said to be working on passing an additional round of funding as the demand for relief has been largely unmet. Just last week, House leader Pelosi and Senate majority leader Schumer pushed for an additional $500 billion in aid—with at least $250 billion going toward small businesses.
Lawmakers appear close to extending funds, though the demand will still be high.
To our customers and applicants
We are optimistic that Congress will be able to send additional funding towards small businesses seeking paycheck protection. We are continuing work to ensure that if and when more funds become available, your application will move forward in an expedited fashion.
For our current applicants, here’s what you need to know:
Your place in line is secure
If your loan application has not been submitted to the SBA for approval or has not yet been approved, your “place in line” is still secure with us. This is crucial if more funding becomes available.
Approval numbers are pending
If you have not received an approval number from the SBA, you are most definitely not alone. Only 1.6M loans have been approved so far—with an estimated application volume of more than 21 million.
Already secured funds will be distributed
If you have been approved, your funds are secure and you will receive further information about distribution of those funds.
CRB is scaling up, not down
Cross River Bank is leveraging this time to scale their processes. They are preparing now to be ready to submit thousands more PPP loans through the SBA’s E-Tran Portal once the SBA re-opens its doors.
We will communicate often
We will continue to update you on the status of your application (and the program overall) at regular intervals. Sometimes, no action will be possible or required, but if you have received an email from CRB indicating they need more information, please use this time to address any outstanding issues so your application is complete when funding is available.
We understand that this is a very stressful time for businesses trying to stay afloat. We are continuing to work to make the process streamlined so that applicants can move quickly through the process as more funding becomes available.
Alternate funding options
While PPP loans are currently unavailable, we recommend that small businesses consider all of their funding options.
Here are a few of alternate funding sources your business might consider:
Main Street loans
On April 9, 2020, the Federal Reserve announced that they would inject $600 billion in lending facilities to small- and mid-sized businesses through the Main Street Lending Program.
Main Street loans are available to companies with up to 10,000 employees or $2.5 billion in revenue. These loans mature in four years and cap at $25 million (with the exception of loan expansions which cap at $150 million). Principal and interest payments are deferred for one year.
Learn more about the Main Street Lending Program here.
EIDL emergency grant
The SBA’s Economic Injury Disaster Loan Emergency Advance (also called a “grant” since it does not have to be repaid) is currently unavailable due to the “lapse in appropriations” notice.
However, should congress provide additional funding, these grants offer $10K to businesses of 500 or fewer employees and can be used to cover current operating costs.
Small businesses can apply for these grants through the end of September 2020 using the SBA online application portal.
Learn more about Economic Injury Grants here.
EIDL disaster loan
SBA disaster loans funded through the Economic Injury Disaster Loan (EIDL) program are also unavailable currently due to the “lapse in appropriations.” However, these low-interest loans can help small businesses cover long-term costs incurred by the COVID-19 crisis.
In contrast to PPP loans, EIDLs can fund up to $2 million and are available through Dec 31, 2020. Applications are streamlined online.
Learn more about SBA disaster loans here.
Emergency banks loans
In addition to federal relief, small businesses should consider reaching out to private financial institutions for emergency loans. Many banks are currently offering quick approvals and low interest rates to businesses affected by COVID-19.
While you could reach out to your current lender and see what options they have available, US Bank and Washington Federal are also offering some of the most compelling lifelines right now. You should also consider digital lenders like Lendio, Kapitus, or Kabbage as they tend to have faster applications and funding times.
Note: We have partnered with some lenders, which may provide us compensation.
Other sources of funding
While emergency loans have the advantage of being tailored to the current situation, there are several other types of funding you could consider for your business in this time of crisis.
Other emergency business loans and alternatives include:
Learn more about emergency business loans and alternatives here.