Applications for the second wave of Paycheck Protection Program funding are open, this time with a focus on smaller businesses and the requirement that they show financial loss to qualify for aid.
"It's more targeted to those affected by the pandemic," said Jay Dale, market president for First Horizon Bank. "You can't have more than 300 employees, so it's for smaller business, and you had to have a 25% decline in any quarter of 2020 in gross receipts."
Applications opened last week just for smaller lenders in order to give a leg-up to community banks, but the applications opened to everyone on Tuesday.
"Small businesses really need additional help, so I'm so glad Congress finally passed this," Dale said.
The $284 billion in forgivable federal loans is a follow-up to a first round of the program that originally included $349 billion in funding. That money was gone within two weeks of applications opening in April 2020. An additional round of funding for $320 billion wasn't depleted, but those applications closed in August.
Applications for this second wave of funding are open through March 31.
Mike Ohlman, the president of nonprofit community lender BrightBridge, said the structure of this most recent round of funding is intended to better serve smaller businesses, particularly those that may have struggled to claim help in the rush to the first round.
"It's not such an avalanche this time," Ohlman said.
Paycheck Protection Program snapshot
Forgivable federal loans through the Paycheck Protection Program originally included $349 billion in funding, but that money was gone within two weeks of applications opening in April 2020.
A second round of funding for $320 billion wasn’t depleted, but applications closed in August.
Applications for the current round, this time with $284 billion in funding, are open through March 31.
At the end of 2020, more than 5 million businesses in the U.S. had tapped $522 billion in the stimulus funds, including more than 99,000 businesses in Tennessee and more than 169,000 in Georgia.
BrightBridge didn't initially make loans in the first round, but instead hung back to try and help small businesses that got left behind in the process, he said.
"We jumped in there because we were doing two things," Ohlman said. "Helping some local small banks and, once we got past that, we made loans directly to those who had fallen through the cracks."
Randy Connelly, the owner of Valkyrie Axe Throwing on East Main Street, said the first round of funding helped him hang on through the shutdown period in the spring, but he needs more help and he isn't sure he'll qualify for this most recent round of funding.
Because he didn't open his business until August 2019, it might be hard to show year-over-year losses, despite the fact that he made no money for a few months in the spring, Connelly said.
"We're working on hopefully getting something for me, but we'll see," he said. "We were closed for months on end, we made almost no money for a few months."
The new funding includes provisions that allow bars and restaurants to claim 3.5 times their payroll — rather than the 2.5 times allowed for other businesses — and that would be helpful to him, Connelly added.
Round 2 of the Paycheck Protection Program
Businesses must show a 25% quarter-over-quarter revenue loss.
Restaurants and other hospitality businesses can multiply their average monthly payroll costs by 3.5, making them eligible for more funding.
Businesses must have fewer than 300 employees to qualify — down from 500 in earlier rounds of funding — and loans max out at $2 million.
"If we get that amount, it would put us in a significantly better place," he said.
Business at Valkyrie has slowly picked up, but he still isn't covering costs, Connelly said. He's down to two employees from the eight he once had, and he's working most shifts himself, he said.
"Most are still around and willing to do hours, but I can't afford to pay them," he said.
Connelly used some of the original Paycheck Protection Program money to buy a trailer to add mobile axe throwing to his offerings, and that's an investment that he's still trying to pay off, he added.
"I still owe a bunch on that trailer, and I'm behind on rent again," he said.
"We've gotten feedback from our clients, especially with the first draw, that it was literally the difference in them keeping the doors open, and what a relief it was to have a stimulus," said Dale, whose bank processed $200 million in loans for 750 business in the Chattanooga area last year.
"If you've had 25% revenue reduction, you may be in distress still and you need this stimulus. It's going to make a big difference for our community."
Contact Mary Fortune at firstname.lastname@example.org. Follow her on Twitter at @maryfortune.