Thursday, March 23, 2023

Puerto Rico’s Top 3 Banks Issue $748M in PPP Loans to SMEs

By on April 20, 2020

An empty conference room (Photo by Drew Beamer on Unsplash)

Oriental Bank Approves $140 Million in SBA-backed Financing; 80% Issued to Small Businesses

SAN JUAN — Oriental Bank issued more than $140 million in Paycheck Protection Program (PPP) loans to some 900 small and midsize enterprises (SMEs) in Puerto Rico before the program ran out of money last week, bank officials said Monday.

This brings the total PPP loan amount issued by the island’s three largest locally based banks to $748 million.

Popular Inc.—which owns Banco Popular de Puerto Rico (BPPR), the island’s largest bank—reported last week that it had approved $398 million in PPP loans for local SMEs, while FirstBank reported the approval of some $210 million in such loans for 921 customers.

The three banks, along with Santander and Banesco and eight local credit unions, were the only local financial institutions authorized by the SBA to issue the PPP (7-A) loans, which provides SMEs with funds to pay up to two months of payroll costs amid the Covid-19 emergency curfew/lockdowns in place stateside and in Puerto Rico since last month.

The BPPR-, FirstBank- and Oriental Bank-issued loans make up almost the totality of all PPP loans approved in Puerto Rico, considering that the SBA reported as of noon Thursday, just before program funds ran out, that financial institutions in Puerto Rico had approved 2,856 PPP loans in the amount of $658.6 million. The federal agency had not updated the information as of Monday afternoon.

The average PPP loan in Puerto Rico was $230,593, in contrast to the $206,000 throughout the United States, according to last week’s SBA report.

Oriental Chief Operating Officer Ganesh Kumar said in a press release that 80 percent of its PPP loans had been issued to small companies and that the average loan came out to $50,000. The bank managed to “guarantee” 85 percent of all applications received, he said, adding that “close to 90 percent” of the loan money has been disbursed.

The PPP loans given to the more than 900 SMEs had an impact on over 25,000 employees, the Oriental COO said.

“For Oriental, this sector is of great importance, since we know the role it plays in the economy of Puerto Rico; for this reason, we assigned more personnel and simplified our processes to give the client a faster and easier response,” he said in a statement. “In record time of just three days, we began to disburse the first loans, and today most of the clients already have the money deposited in their accounts.”

Kumar said the remaining loan amounts would be disbursed by Tuesday.

“From the first day of this crisis, we have been hand in hand with all our clients and with this Relief Plan for Businesses, we have made available the help they need at this time,” he said. “As their partners, we will continue to work for their well-being and to offer them solutions that fit their business, because we are together in this and we are more than ready to help our customers.”

Many SMEs in Puerto Rico PPP loans to help them survive the Covid-19 pandemic crisis were left hanging this week when the SBA program’s $349 billion in funding ran out by Friday—barely two weeks after it was launched.

The local SMEs, imperiled by a month-long curfew/lockdown order that has been extended into May, are now waiting for Congress to approve a second allotment of $250 billion for the program, enacted as part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The $450 billion legislation that includes added PPP funding has stalled in Congress over Republicans and Democrats bickering over funding for Covid-19 testing.

Kumar said that if new funds are approved for this program, Oriental would give priority to customers who have already applied in the first round. If the owner of a business or company has not yet requested help and needs to request it, they can access, he said, adding that the bank has other “other alternatives” to help businesses.

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