The latest round of the Paycheck Protection Program began accepting applications this month, and Nevada banks responsible for processing small business loans are reporting steady demand.
The federal program, which offers potentially repayable loans to small businesses that keep employees on their payroll, relaunched this month with $ 284 billion and is open to all lenders and borrowers.
“Bankers are very busy processing P3 applications for Nevada businesses,” Nevada Bankers Association president Phyllis Gurgevich said on Monday. “As expected, there are some issues in the application process, as well as changes in the application tips.”
The numbers coming in
Gurgevich said that while it is still too early to get local data on the PPP’s “second drawdown”, Nevada banks are reporting “strong demand” for loans after the US Small Business Administration – which administers the funds with the US Department of the Treasury. – started accepting applications last week.
Nevada State Bank processed more than 2,800 PPP applications with nearly 400 loans funded on Monday.
“The initial response has been strong and we expect it to continue,” Nevada State Bank spokeswoman Sandi Milton said. “Our combination of technology and helpful bankers was a very successful formula in the first round, and we expect that to continue into the second round.”
Wells Fargo spokesman Anthony Timmons said Monday the bank has already received more than 1,500 P3 requests from Nevada companies. So far, these PPP requests have totaled nearly $ 82 million in funding and would save nearly 10,000 local jobs.
Nationally, Wells Fargo processed 60,000 P3 requests for a total of more than $ 3.4 billion. The vast majority of the PPP pipeline, at 80 percent, was applications from small business owners filing for the second time.
Small lenders, such as Summerlin-based Lexicon Bank, have also seen plenty of PPP applications making their way into the SBA pipeline.
Leo Moschioni, executive vice president and chief credit officer of Lexicon Bank, said that since the bank started accepting PPP applications last Friday, it already has 120 loans approved by the SBA.
“It’s about $ 24 million in loans,” Moschioni said. “It’s working pretty well and we have 28 more loans, worth $ 4.5 million, waiting to be approved by the SBA.”
Gurgevich of the Nevada Bankers Association said this new round of PPP “is quite different from the first round, which seemed to be organized like a race. The approval was almost instantaneous in the previous cycle, allowing lenders to move immediately to financing the loan. “
For this new round, Gurgevich said there was a one to three day delay between submitting an application and receiving approval.
New PPP rules
But unlike last year – in which the $ 659 billion loan program created last March under the CARES Act brought in two tranches of PPP funding in 2020 after the $ 349 billion first round was exhausted. dollars in less than two weeks – some lenders say the $ 284 billion “second draw” program is in constant demand.
“We’ve seen less turnout, in part because some companies don’t qualify like they maybe last year,” Moschioni said. “It’s a little slower than originally expected.”
With the new PPP financing, there are stricter rules: companies can have a maximum of 300 employees, up from 500, and the maximum loan amount this time around is $ 2 million, a decrease of $ 10 million. of dollars. Borrowers are also required to prove that they have lost income of at least 25% in any quarter of 2020 from the previous year.
“Some companies have been very successful last year, while others have really struggled,” Moschioni said. “In the case of a restaurant, as opposed to a delivery service, you’re going to have a wide range of income gaps that prevent people from participating this time around.”
Spread the word
Lexicon Bank, which was founded in 2019, said its highly tactile experience and personalized services allowed it to “significantly expand” its customers during the first wave of PPP.
“Although we have only one location, one of the key elements of being a community bank is being able to be very agile throughout this process,” said CEO Stacy Watkins.
“Being able to pick up the phone and call someone and say, ‘Hey, this is the president of the bank’ or ‘This is your relationship manager’ is huge when there is a lot of unknowns and uncertainties in our local community, ”Watkins added. “We’re not hiding behind a 1-800 phone number or an email. We are here in the market, we are open and we are available after hours if needed. “
Watkins said the bank spoke to SBA officials on Monday, who told it there was still $ 250 billion in P3 funds.
“There’s a lot of reluctance in the market to go out, so we encourage customers to go out and they can do that with us,” Watkins said.
Banking sector executives are also educating small businesses about the PPP’s “second draw”.
“The NBA conducts outreach activities with chambers of commerce and other business groups, as well as state and federal officials and any groups who may have questions or know of businesses that do not know. not how to apply “, Gurgevichh said, adding that its members “are happy to participate in Q&A to help anyone interested in applying for a PPP loan, determining if they are qualified and ensuring they can receive assistance under the program. “