Kevin Plein was surprised – and relieved – when he saw the Friday morning email from
telling him that his Paycheck Protection Program loan had been approved.
An earlier request for money sat in limbo for weeks, leaving Plein wondering if A-Game Sports, an indoor sports company he co-founded, might not survive into its fifth year. The New Rochelle, New York-based company provides training for young athletes and employs seven full-time and 50 part-time staff.
“This is the lifeline we were looking for,” Plein said of his loan, which totals less than $ 50,000. “It helps us bridge the gap with our summer camp season, which was critical. Otherwise we wouldn’t have had employees, we would be behind on our rent, and we would wonder if camps were even going to take place. “
Plein and his team are among the thousands of people expected to benefit from the second iteration of the PPP, which provides forgivable loans through the Small Business Administration to employers affected by Covid-19. The initial $ 349 billion PPP quickly ran out of funds.
But on April 24, President Donald Trump enacted the Paycheck Protection Program and the Health Care Enhancement Act. This second round of the PPP made an additional $ 310 billion available. The new round began on April 27 at 10:30 a.m. EST.
As of Sunday, the SBA granted 2.2 million second-round PPP loans, valued at more than $ 175 billion. This means that more than half of the money allocated to the second round of the PPP has been used. The average loan amount for this stage is $ 79,000. The SBA said this indicates that the PPP is helping the tiniest of small businesses.
Lenders with less than $ 1 billion in assets and non-banks processed nearly 500,000 of the loans. These lenders include community development financial institutions, certified development companies, micro-lenders, agricultural credit institutions, and fintechs. Over 850,000 loans, or about a third of the 2.2 million loans, came from lenders with assets of $ 10 billion or less.
In April, the SBA processed more than 3.8 million loans for more than half a trillion dollars in economic support, including both rounds of the PPP.
The initial PPP, approved in late March under the $ 2 trillion Cares Act, garnered negative attention when state-owned companies, including many large restaurant chains, revealed they had received millions in PPP loans. while small restaurants and businesses were excluded. . In just 14 days, the program processed $ 342.28 billion in loans, the equivalent of what the SBA processed in 14 years, before running out of money on April 16.
A number of major restaurant chains, including
Ruth’s welcome group
(SHAK), repaid millions of dollars in loans after a backlash.
Due to the outcry, the SBA is reviewing all loans over $ 2 million. This week, he also set aside a period of time during which only small financial institutions, those that are more likely to serve small businesses, could accept loans. Only lenders with less than $ 1 billion in assets were allowed to submit PPP applications from 4 p.m. to 11:59 p.m. Thursday.
It is not known how many financial institutions processed loans during this period. The SBA did not respond to a request for comment.
The agency will write off the debts if the companies keep their staff. At least 75% of each loan must go to the payroll.
Plein initially applied for his loan through Chase on April 6, during the first round of the PPP. The loan was not approved, but Plein retained its place when the second iteration of the PPP began. To cover its bets, Plein also applied for PPP loans with BlueVine and Lendio.
“I thought one of the three would strike,” he said. The funds are expected to appear in Plein’s bank account within the next three days, an email from Chase (ticker: JPM) said.
Write to Luisa Beltran at [email protected]