Nevada businesses to get $1.3 billion under SBA’s PPP; funds have already run out
Silver State received fewest number of loans, least money compared to states with comparable populations
The Nevada Independent
UPDATE: 10:30 a.m. Thursday
This story was first published April 15 by The Nevada Independent and is republished here with permission. For more Nevada news, including wall-to-wall coronavirus coverage and a constantly updating live blog, visit The Nevada Independent.
Below is updated information from The Nevada Independent, published the morning of April 16, reporting that Nevada received the fewest number of loans and the least amount of money under the first round of the Small Business Administration's Paycheck Protection Program (PPP) compared to states with comparable populations sizes.
The Silver State, which has a population of almost 3.08 million people, had 4,209 loans approved by the SBA totaling $1.25 billion as of April 13. It’s the least amount of aid received by the seven states with populations between 2.9 million and 3.5 million over that time frame.
According to the Wall Street Journal, Nevada also ranks near the bottom for loans per 1,000 businesses with fewer than 500 workers.
The program proved to be extremely popular with businesses in need of support to keep their workers employed. SBA announced Thursday, April 16, that the program has run out of funding. Congressional leaders are negotiating with the White House on adding more funds.
More than 4,200 loans comprising more than $1.3 billion were approved in Nevada in the first seven days of the Small Business Administration’s Paycheck Protection Program, according to the Nevada Bankers Association.
“From the data we are receiving from our NBA members, we estimate about half of those have already been funded,” said NBA President and CEO Phyllis Gurgevich in a release of frequently asked questions about the program.
Nationwide, more than 4,600 lenders have participated in the program providing 1,035,086 loans so far totaling $247.5 billion.
Gurgevich expects the program to be replenished at least once. Funds were expected to run out by the end of Wednesday, April 15.
Launched on April 3 to help businesses with fewer than 500 employees stay afloat during the coronavirus pandemic, Congress initially funded PPP at about $350 billion.
Senate Republicans and the White House are pushing to add another $250 billion. But House and Senate Democrats want more funds for other parts of the economy, including $150 billion for states and more money for hospitals.
The NBA recommended that companies be ready with data on payroll and other expenses that qualify for loan forgiveness before applying. Under the program, loans will be forgiven if the funds are used to keep the current workforce in place or to pay mortgage interest, rent and utilities over an eight week period, which starts when the loan is funded.
“Before businesses apply, they should consider that the eight weeks to fulfill payroll obligations begins at the time the loan is funded,” Gurgevich said. “If your business will not be ready to have employees on payroll, the loan may not be forgiven. The timing on being able to fulfill the actions required for forgiveness will be important for each business to contemplate.”
Once a loan is approved, according to the NBA, the lender floats the loan to the borrower. If the borrower abides by certain SBA rules for the next eight weeks, the borrower can apply to have up to 100 percent of the loan forgiven by the SBA.
The SBA then provides the bank with the amount of the loan that is forgiven, and the remainder, if any, is converted to a two-year loan at one percent interest.
The program is larger than anything that SBA has ever undertaken and resulted in delays in getting funds to businesses.
“SBA lending last year totaled $28 billion,” Gurgevich said. “SBA is processing loans for that amount in a single day right now.”
In addition to the increased workload, banks are also trying to operate a safe way that protects their employees.
“These are not normal times, and these are not normal loans,” she said.
The state’s banks have faced significant hurdles in getting the loans closed, including “glitchy systems, incomplete guidance and changing forms and rules to participate in the SBA Paycheck Protection Program,” Gurgevich said.
“Difficulties were not necessarily unexpected,” she said. “Still, the program is set to place $349 billion directly into the hands of small businesses in record time through a system that didn’t exist two weeks ago.”
One problem with the program was that there were so many companies seeking loans that SBA portal for approval was overwhelmed, delaying the process.
The Treasury has urged that businesses go to banks with which they have an existing relationship in order to streamline the application process by relying on the information on file. But some banks have reached their limit, forcing some businesses to use banks with which they do not have a relationship and, possibly, delaying the process.
Disclosure: The Nevada Independent has applied for a loan from the Small Business Administration.
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