When the Small Business Administration (SBA) launched the first round of Paycheck Protection Program (PPP) funding—made possible by CARES Act legislation—South Dakotans received 11,400 loans totaling $1.6 billion.
Across the country, the $349 billion in PPP funding dried up in less than two weeks.
As the second wave of funding became available on Monday, April 27, SBA District Director, Jaime Wood, encouraged businesses to act quickly. As of Wednesday, around $90 billion of the $310 billion allocated has already been spoken for.
This time around, lenders’ systems were already in place, and many businesses were prepared to submit their applications as the portal went live on Monday morning.
“We’re anticipating it’s going to go just as fast, now that more lenders are in the queue, and more small businesses are feeling the pinch,” Wood said. “Here in South Dakota, we were several weeks behind the East and West Coasts as far as the impact of the virus, so now businesses here are feeling it more, and there could be more of a surge for PPP disaster assistance.”
According to Wood, South Dakota is home to over 86,000 small businesses, many of which are feeling the impact of COVID-19.
“We did over 11,400 loans last time so it will be good to see where we go in this next round,” she said. “We recommend South Dakota small business owners take advantage of this program, so that as we move to getting back to full operational status, the economic comeback will be easier.”
Managing the demand for PPP loans
The demand for these loans naturally put a strain on the systems of both the SBA and bank lenders early on, but Wood says she is impressed by the ways in which local banks have stood up to the task.
“It took a bit of a ramp-up in that first round. Lenders who traditionally work with a lot of SBA products were very comfortable going right into PPP loans, but others had to learn and understand the procedure before they could launch,” Wood said. “While some lenders got a later start, they learned the process quickly and provided incredible response across South Dakota. These SBA partner lenders are the first line of delivering critical funds to businesses struggling to make payroll due to lack of revenue coming in caused by COVID-19.”
Because of the increased demand for PPP loans, the SBA and the Treasury have implemented measures meant to maximize fairness and accessibility for these funds.
These include pacing the number of loans processed through the online system, instituting a maximum dollar amount that lenders are able to process, ensuring the process operates on a first-come, first-serve basis, and offering guidance for lenders who are receiving large amounts of applications.
While the process is moving quickly, Wood says new lenders are still welcome to get on board.
“We’re always trying to bring more commercial lenders and credit unions into the fold, into the network of providing SBA-guaranteed lending,” she said. “This program has provided a platform that, while a bit intense, is a great framing function for building a stronger network with SD lenders.”
Wood also emphasizes the importance of outreach in this process.
“We want to make sure everyone is aware and we’ve engaged in a lot of different activities to reach our growing demographics,” she said.
This includes a translation capability on the SBA website, as well as the ability to work with a translator within the SBA system or with one of its resource partners. In addition to serving customers for whom English is not the native language, Wood’s office emphasizes rural outreach.
Cities with populations of less than 50,000 are considered rural, and in South Dakota, only Rapid City and Sioux Falls sit above that mark.
“We’re very much in touch with the people in rural areas through chambers of commerce, mayors’ offices, and economic development centers,” Wood said.
Business owners interested in pursuing a PPP loan are encouraged to reach out to a lender immediately. For more information, view the SBA’s full list of frequently asked questions in regards to the PPP loan.
If a business owner is ineligible for a PPP loan, Wood encourages them to look into the EIDL program, which is currently inactive but should be reopening up for applications in the near future.