Colorado Community Lenders Lead New Wave of P3 Lending

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The US Small Business Administration launched a third round of the Paycheck Protection Program on Monday morning, making the rules more flexible and using a phased rollout to avoid the Black Friday door-to-door sales vibe that prevailed in the United States. last April.

“As over 109,000 PPP loans were approved in Colorado during the first and second PPP awards, there is potential for a similar volume of Colorado applicants for second-draw PPP loans,” predicted Frances Padilla, director of the SBA’s Colorado district office, in an email.

Congress approved $ 935 billion in federal aid last month, earmarking $ 284.5 billion to help small businesses stay afloat during the pandemic. The loans, available until March 31, include a $ 35 billion set aside for first-time borrowers and $ 50 billion for small businesses with less than 10 employees.

One criticism of the first round of PPP was that large borrowers crowded in front of the little ones. In Colorado, borrowers with a loan of $ 1 million or more were approved an average of one month earlier than borrowers with loans of less than $ 10,000.

To remedy this, the SBA opened the loan program at 7 a.m. Monday only to community lenders who work with the smallest and most underserved businesses: Community Development Financial Institutions (CDFIs), financial institutions. minority depositories, certified development companies and microcredit intermediaries. .

“It’s been very busy, with lots of phone calls and lots of inquiries,” said Laurel Walk, director of loans at Colorado Lending Source, which has partnered with Lendio, an online lending platform. for small businesses, to do PPP. ready.

First-time borrowers have exclusive access on Monday and Tuesday, and the program will open to “second draw” borrowers using community lenders on Wednesday.

To be eligible, repeat borrowers must have 300 employees or less, have experienced a reduction of at least 25% in sales between comparable quarters in 2019 and 2020, and have spent all of the money in the first round for the permitted uses, primarily salary expenses. .

Banks, credit unions and other conventional lenders are expected to start receiving applications Wednesday, said Jenifer Waller, president of the Colorado Bankers Association.

The new PPP rules were dropped on Sunday night, giving banks two full days to digest them, which should allow for a smoother opening than last year, when lenders had just 24 hours to get started. Some have chosen to delay accepting loans, which created confusion.

“The two-day delay is beneficial. It will be a smoother process, touching wood, than it was the last time, ”she said.

One of the concerns of bankers is that the SBA is replacing its old E-Tran system, which last year bogged down under the overwhelming volume of requests, with a new platform, Waller said. With any new deployment, there is always a risk.

Padilla said she could not yet provide specific information on the performance of the new platform. But it will be familiar to lenders who have worked on the PPP forgiveness platform and it “will allow for rapid processing,” she said.

Borrowers are advised to contact their current financial institution first for assistance with a PPP loan. The Office of Economic Development and International Trade also has a COVID-19 Trade Resource Center to help businesses and nonprofits with information on PPP, as well as economic disaster lending and express bridging loans. The number is 303-860-5881.

The third cycle has been expanded to cover more nonprofits, including 501 (c) (6), housing co-ops, and destination marketing organizations.

This time around, borrowers are given greater flexibility to cover expenses beyond payroll, including operating costs, property damage, vendor costs, and equipment purchased to protect clients. workers. Borrowers can choose a time frame to spend the money of eight or 24 weeks. And loan cancellation should be more streamlined during this go around, especially for borrowers who take out loans below $ 150,000.

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