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By Michelle Price and Pete Schroeder
WASHINGTON (Reuters) – The U.S. government was scheduled to reopen its pandemic small business assistance program on Monday with $ 284 billion in new funding and overhauled rules that aim to provide cash to businesses most in need while eliminating fraud and abuse.
The Small Business Administration (SBA) announced Friday that it will launch a third round of the Paycheck Protection Program (PPP) this week, starting with small community financial institutions on Monday and larger lenders in the coming days.
By prioritizing small lenders, the SBA hopes to respond to criticism from lawmakers that minority and female-owned businesses did not get enough money in the first two PPP rounds last year by compared to large companies.
Administration officials told reporters on Friday they expected sufficient funds to meet demand.
Under the program, lenders on behalf of the government distribute loans that can be canceled provided the money is spent on eligible costs, such as payroll and rent. To date, the PPP has distributed $ 525 billion through more than 5 million loans.
Congress authorized the new funds last month as part of another pandemic stimulus package that also relaxed P3 rules on who can get money and what it can be spent on.
Among the main changes, companies that took cash in the first two rounds will be granted a second PPP loan on the condition that they can show a 25% impact on their revenue. To address concerns about fraud, the SBA is also introducing new due diligence checks.
For details on program changes, see FACTBOX [L1N2JJ2XB].
While lenders say the changes are positive, some fear they may cause initial problems, especially since the updated application forms and SBA guidelines were not released until Friday.
“It’s great but it’s really complicated,” said Dan O’Malley, CEO of Numerated, which provides PPP loan processing software.
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