The federal government has begun approving coronavirus-relief loans for small businesses in low-income neighborhoods to address past lending disparities, officials said.
On Monday, the Small Business Administration started processing applications for first-time borrowers of Paycheck Protection Program loans. The forms are submitted by community financial institutions that lend to small businesses, particularly those owned by minorities and women or are in poor communities.
The eligible institutions are Community Development Financial Institutions, Minority Depository Institutions, Certified Development Companies and Microloan Intermediaries, SBA said on Monday, adding the institutions together represent just 10% of all PPP lenders.
The agency said it "plans to dedicate specific times to process and assist the smallest PPP lenders."
The latest version of the PPP ends March 31. It consists of more than $284 billion in federally guaranteed loans from banks and other lenders. The interest rate is 1% with a five-year term.
Businesses and nonprofits that have received a PPP loan previously are eligible to apply for a second loan. They must employ 300 or fewer workers and show a revenue loss of 25% or more last year compared with 2019. The second PPP loan is up to $2 million per applicant.
Applications from the community financial institutions for second PPP loans will be approved starting on Wednesday. "A few days later, additional lenders will be able to submit first- and second-draw PPP loan applications," SBA said.
Congress last month set aside $15 billion in guarantees for PPP loans made by community financial institutions. House and Senate members were responding to complaints that minority- and women-owned businesses and those without a banking relationship had difficulty in securing loans during PPP’s first phase between April 3 and Aug. 8.
More information may be found at sba.gov/ppp.
Separately, on Monday, applications began to be accepted from restaurants for grants of up to $5,000 to purchase equipment and supplies needed to survive the winter amid new COVID-19 restrictions on dining.
State officials said the Raising the Bar Restaurant Recovery Fund, with more than $3 million donated by two liquor distributors, is expected to help about 600 restaurants initially.
More information is available at nwsdy.li/RBRR.
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