Delaware falls to last place in PPP 2.0 loans
WILMINGTON – More than two weeks after the last loan cycle of the US Small Business Administration‘s Paycheck Protection Program, the First State ranks last.
As of Feb. 7, Delaware ranked last in total PPP loans obtained and total dollars allocated in all 50 states, according to SBA data. Borrowers have secured 2,787 loans with a total value of over $ 287.8 million, but the slow start in Delaware comes as about a third of all the money allocated by Congress for the cycle has been claimed. .
In the first full week of PPP 2.0 lending, Delaware ranked last in total loans, but ahead of Vermont in aggregate. Not anymore, as Green Mountain State raised more than $ 303 million in week two, according to the SBA.
Despite having nearly 40% more residents than the least populous state of Wyoming, Delaware has had 80% fewer loans and over $ 70 million less than its smaller counterpart. The top state ranks just ahead of Washington, DC, which has nearly 300,000 fewer people in total loans, and far behind the district in value, with DC seeing more than $ 369 million loaned out.
It’s a familiar position for First State, which started among the bottom of the program’s first round of funding in April 2020. By the end of the second round of funding in August, however, Delaware had gained a few spots in both. rankings to finish. closer to its 46th population rank.
A new round of PPP lending began on January 11, starting with a targeted opening to lenders serving underserved communities, and opened more widely on January 19. The PPP was the most suitable federal program for the economic recovery of businesses affected by the effects of the COVID-19 pandemic, offering low-interest loans that could be canceled entirely under certain conditions.
Originally instituted under the CARES Act passed by federal lawmakers in March 2020, it distributed $ 525 billion of the $ 659 billion allocated by Congress before the program expired in August. Delaware companies have received more than 13,000 of these loans worth more than $ 1.5 billion.
As part of the second stimulus package approved by Congress and President Donald Trump in December, the PPP was relaunched with $ 284 billion to be allocated through March 2021, including at least $ 15 billion for underserved communities. .
When the lending portal reopened on January 11, it initially accepted the first PPP loan applications from participating community financial institutions (CFIs), but it appears that interest was mixed. SBA data shows that only about 5% of loans processed came from an CFI, and they accounted for about $ 4.5 billion of the $ 100.5 billion allocated. In Delaware, the only participating FCI was True Access Capital, based in Wilmington.
The third round of loans has been most popular with those looking for a second PPP loan, with around 72% of loans going to second-time borrowers across the country. These loans are capped at $ 2 million instead of the previous $ 10 million, and are only eligible for businesses with 300 or fewer employees, up from 500 in the early rounds.
Borrowers must prove a reduction of at least 25% in gross receipts in a quarter comparable to 2020, which could explain the decline in loan interest. The terms of the third round loans are more favorable, however, as the coverage period can be set from eight to 24 weeks and cover additional costs, including operating expenses, property damage costs, supplier costs and worker protection expenditure.
Hotel and restaurant operators are also now allowed to claim up to 350% of the monthly payroll compared to the 250% allowed in the previous cycle, to deal with the disproportionate impact they endured last year. . This appears to be effective, as around 18% of loans have gone to these industries so far, totaling over $ 18 billion.
The Biden administration inherited PPP 2.0 just over a week after its launch, and officials scrambled to increase lending to minority business owners. According to SBA data, only around 11% of loans went to borrowers who identify with a minority group.
“While we are excited to do a better job of reaching the hardest-hit industries and communities, we are committed to taking additional steps to ensure equitable access to underserved businesses and which we are empathetically conducting to support small companies in a difficult place, ”SBA senior advisor to administrator Michael Roth said in a statement.