Small and mid-sized US banks are preparing to relaunch their emergency loan programs after president Donald Trump signed off on an extension to the Paycheck Protection Program (PPP) on Friday.
The House and Senate last week agreed to a $310 billion extension to the PPP, bringing the size of the small business aid program to $659 billion.
Banks will resume processing applications from 10:30am Eastern time.
Florida-based Cogent Bank said on Friday that it had approved 581 loans totalling more than $124 million in the first round.
CEO Lee Hanna said the reliance on a community bank for PPP applications “reinforces the unique and valuable role a community bank offers to the companies it serves”.
In an interview with NPR, Edward Barry, CEO of Capital Bank in Maryland, explained that his bank had facilitated $172 million in loans to nearly 600 small companies through the PPP in April — about as much as the bank normally lends in a year.
He told the broadcaster that Capital Bank had built a website ready to accept applications before the government’s rules were finalized at the end of March.
Barry said: “We started to kind of lay out end-to-end, what do we think needs to happen? — knowing there was a lot of empty boxes and said, well, what do we think the answers are? — and write them in pencil or in chalk. And we’ll just write them in ink when the government gives us answers.”
Following the announcement of the PPP extension on Friday, US Treasury secretary Steven Mnuchin and Small Business Administration (SBA) administrator Jovita Carranza thanked policymakers in a joint statement.
“The PPP has supported more than 1.66 million small businesses and protected over 30 million jobs for hardworking Americans,” the pair said. “With the additional funds appropriated by Congress, tens of millions of additional workers will benefit from this critical relief.
“We encourage all approved lenders to process loan applications previously submitted by eligible borrowers and disburse funds expeditiously.”
Rob Nichols, president and CEO of the American Bankers Association, added: “We thank president Trump and Congress for finalizing bipartisan legislation to provide much-needed additional funding for the SBA’s Paycheck Protection Program.
“While this program has already provided a critical financial lifeline for nearly 1.7 million struggling small businesses hurt by COVID-19, millions of other businesses are still looking for help.
“Signing this legislation into law will allow America’s banks to quickly deliver additional relief to as many of those small businesses as possible, saving jobs and limiting the economic damage from COVID-19.”