The Small Business Administration’s $284 billion reopening of its popular Paycheck Protection Program — providing forgivable loans to small businesses hurt during the COVID-19 pandemic — will soon expand after a limited launch early this week.
The extension of the program is part of the $900 billion COVID-19 relief bill passed by Congress late last year.
The program reopened on Monday, but only small, specialized lending institutions that provide loans to underserved populations could accept applications under a $15 billion set-aside, said Jon Bittner with the Alaska Small Business Development Center, a program administered by the SBA.
The tailored launch came in response to criticism that minority-owned businesses didn’t benefit enough from the first round of the Paycheck Protection Program earlier this year, Bittner said.
“They wanted to make sure those businesses got first shot” this time, Bittner said.
The SBA will broaden the types of lenders that can participate starting Friday, the agency said in a statement. It will include community banks, credit unions and farm credit institutions, the agency said.
On Tuesday, another expansion will open the program to all eligible lenders, including the large banks that processed and delivered many of the forgivable loans earlier this year.
More than $500 billion was distributed to small businesses nationwide in the spring and summer, including $1.3 billion to about 12,000 Alaska businesses. The program was designed to cover employee wages, rent, bills and other basic costs.
The SBA has started forgiving eligible loans, the agency said. So far, it has forgiven 1.1 million loans collectively worth more than $100 billion. It has received about 1.3 million applications seeking forgiveness of about $170 billion.
Most Alaska companies that received PPP loans in the spring or summer will be eligible to receive a second loan, Bittner has said. They must show that revenues in a single quarter this year are 25% less than the same period in 2019, he said.