The government was set on Monday to reopen its small business pandemic aid program with $ 284 billion in new funds and renewed rules that aim to bring money to the most needy companies while cracking down on fraud and abuse.
The Small Business Administration announced on Friday that it would launch a third round of the Payment Check Protection Program this week, starting with small community financial institutions on Monday, and major creditors in the coming days.
By prioritizing smaller creditors, the SBA hopes to respond to criticisms from lawmakers that minority-owned companies and women did not receive enough money during the first two rounds of PPP last year, compared to larger companies.
Government officials told reporters on Friday that they hoped the funds would be sufficient to meet demand.
Under the program, lenders on behalf of the government distribute loans that can be forgiven as long as the money is spent on eligible costs, such as payroll and rent. To date, 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, which also loosened the PPP rules on who can get money and what it can be spent on.
Among the main changes, companies that have accepted money during the first two rounds will be allowed a second PPP loan, as long as they can show a 25% impact on their revenues. To address concerns about fraud, the SBA is also introducing new due diligence checks.
While creditors say the changes are positive, some are concerned that they may cause some initial setbacks, especially since the updated application forms and guidelines for the SBA rules were released only on Friday.