Late yesterday, the news reported that The Small Business Administration (SBA) sent a memo to lenders alerting them of two changes to SBA’s Payroll Protection Program (PPP) set to reopen at 10:30 AM ET today.
First, there will be a cap of $60B per bank. Second, “SBA will also take applications in one bulk submission with a minimum of 15,000 loans.” The cap appears to level the playing field somewhat in what is expected to be a rush to process applications for the $310 billion approved by the government. The newly signed $484 billion coronavirus relief bill includes an additional $310 billion for the Paycheck Protection Program, with $60 billion of that money reserved for small lenders.
According to Darin Leong, ESQ:
The news is reporting this as a “cap,” but it is not. It is giving the large banks (like JPMorgan Chase) the entire second round of funding (except the amount set aside for smaller lenders) in one fell swoop. In the first round, the largest lender (Chase) totaled $14B. That leaves $46B for Chase to submit in a single “bulk submission” early in the morning. Other large banks such as Bank of America, Wells Fargo, etc., likely also have over 15,000 applications ready to go. If the big banks can successfully bundle their loans, $250B will be gone in a matter of minutes.
The SBA called the steps “prudent and reasonable” due to the unprecedented demand for the loans.