Friday, August 14, 2020

SBA urges businesses to vie for remaining $100 billion in PPP funding

By on May 7, 2020

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More than 20,000 SMEs in Puerto Rico, USVI benefit from $1.1 billion in Covid-19 emergency loans

SAN JUAN — The acting district director for the Puerto Rico and U.S. Virgin Islands District Office of the Small Business Administration (SBA), María de los Ángeles de Jesús, on Thursday called on owners of small and midsize enterprises (SMEs) and nonprofit entities who have yet to apply for Paycheck Protection Program (PPP) forgivable loans to do so, noting that the program “still had more than $100 billion” in funds.

“To date, over 20,000 small businesses in Puerto Rico and the U.S. Virgin Islands have been able to keep their employees on payroll thanks to funding provided by the Paycheck Protection Program,” de Jesús said in a statement. “There’s still time for many more small business owners to take advantage of this unique opportunity to help employees provide for their families as they continue to make a living. We encourage them to visit their local lending institution—whether a commercial bank or a credit union—today.”  

She said the commercial banks certified by the SBA to issue PPP loans are Banco Popular de Puerto Rico, FirstBank de Puerto Rico, Oriental Bank, Banco Santander Puerto Rico, and Banesco USA. The credit unions certified for the program are Caribe Federal Credit Union (CFCU), Cooperativa de Ahorro y Crédito de Arecibo (COOPACA), Cooperativa de Ahorro & Crédito de Maunabo (Mauna-Coop), Cooperativa de Ahorro & Crédito de Camuy (CamuyCoop), Cooperativa de Ahorro y Crédito Dr. Manuel Zeno-Gandía, Cooperativa de Ahorro & Crédito Vega Alta (Vega-Coop), Cooperativa de Ahorro & Crédito Oriental, and Cooperativa de Ahorro & Crédito Jesús Obrero.

The Puerto Rico Economic Development Bank has also been certified by the SBA to issue PPP loans, she said.

The SBA approved more than $1 billion in loans to 20,414 Puerto Rico and USVI small business within five days of opening the second round of PPP funding on April 27, de Jesús said, contrasting the new figures with the 3,096 loans for $720.5 million issued during the two weeks of the program’s first round of funding.

The latest SBA figures as of May 1 for the two U.S. territories indicate that the number of loans increased almost seven-fold and that loan amounts surged 44.3 percent compared with the first round of funding. Financial institutions in Puerto Rico issued 19,691 PPP loans for a combined $987.7 million during the first week of the second round of funding, while 723 PPP loans, for a total $52.04 million, were issued in the USVI during the same period, according to the SBA.

Ramped up origination

In the first round of the program, the SBA approved fewer loans in Puerto Rico than in 51 of 56 U.S. jurisdictions (the 50 states, Washington, D.C., and the five territories). This improved in the first few days of the second round of funding, when only 31 U.S. jurisdictions received more PPP loans than the island.

“Our numbers speak highly of the incredible work we have done in the district to help our banks and community lenders gain adequate access to our systems so that they, in turn, could assist so many small businesses in just a few days,” de Jesús said. “To have approved over $1 billion in small loans during such a short period of time after the second round of funds was made available is a historic achievement for our district.”

The $349 billion in first-round program funding, which started April 3, ran out barely two weeks after it was launched. The program, created under the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act (Cares Act), disburses funding on a first come, first served basis, or according to how quickly authorized banks and credit unions can process the loans.  

Only days after the PPP funding ran out, Congress approved an additional $320 billion for the program, created to help SMEs survive the lockdowns that have forced the closure of these establishments during the Covid-19 pandemic.

Varying figures

The figures being provided by the SBA seem to lag those provided by financial institutions. The island’s top three banks reported having issued a total of $748 million in PPP loans during the first round, well over the $720 million reported by SBA.

Asked by Caribbean Business about the discrepancy, Angelique Adjutant, the local SBA office public affairs officer, could not provide an explanation. A breakdown of local PPP loans according to industry, location and business size was not available, she said.

Banco Popular de Puerto Rico, the island’s largest bank, reported this week that it had already issued $1.1 billion in PPP loans to SMEs locally and in the USVI as of May 1, including loans in the first round. In second-round funding, as of Monday the bank had processed 14,082 applications for $660 million in PPP loans, of which $647 million were issued in Puerto Rico and $13 million in the USVI.

Since the program began on April 3, the bank has processed 15,277 applications for $1.04 billion in PPP loans for Puerto Rico SMEs that employ more than 227,000 employees. Of these loans, 61 percent were for amounts of less than $25,000 and 31 percent were between $25,000 and $150,000.

SBA reported that the average PPP loan size for all U.S. jurisdictions is $79,000.

As of May 1, some 5,432 lenders in the program issued 2.2 million loans for $175.7 billion, according to the federal agency, which noted that 53 percent of the lenders had more than $50 billion in assets, while 32 percent had less than $10 billion in assets.

SBA Atlantic Regional Administrator Steve Bulger said Thursday in a press release that as of closing on Tuesday the program nationally had issued 2.4 million loans for $181.2 billion. More than 900,000 of those loans, worth $57.3 billion, were issued by small lenders.

SBA forgives the portion of Paycheck Protection loan proceeds used to cover the first eight weeks of payroll costs, rent, utilities and mortgage interest. Loan payments may be deferred for one year, and is retroactive from Feb. 15, so employers can rehire their recently laid-off employees through June 30.

“The Paycheck Protection Program is working. Small businesses are keeping their employees on payroll and earning salary,” Bulger, who oversees the federal agency’s operations in New York, New Jersey, Puerto Rico and the USVI, said in a statement.

‘Smooth sailing’

Popular Inc. President and CEO Ignacio Álvarez told reporters during a recent virtual roundtable that the processing and approvals of PPP loans in the current round is being handled better by the SBA than in the first round.

“The first round was difficult, but we have learned the lessons and now it is smooth sailing,” he said. “We are reaching many small businesses. This time, if everything goes as expected, substantially everyone who applies for the loan and is eligible will get it. The system has been slow but the money is being handled better.”

Meanwhile, Oriental Bank Chief Operating Officer Ganesh Kumar said in a press release Wednesday that the institution has so far issued $275 million in PPP loans to 3,300 SMEs employing 58,000 people since the program started.

Puerto Rico Chamber of Commerce (PRCC) President José E. Ledesma Fuentes told Caribbean Business that most of the organization’s members who had applied for PPP loans had them approved by the SBA.

“The SBA measure to limit the number of loans issued by the largest U.S. banks was a success in avoiding these banks getting the huge amounts like they did last time,” he said.

Ledesma said, however, that he was concerned about the lack of information provided by SBA on the distribution of these loans in Puerto Rico—data he noted is needed to know whether all industries and areas of the island are being covered.

“We don’t know if businesses in the southwest of Puerto Rico, which already had been paralyzed by the earthquakes are getting the aid,” he said. “It has been hard for those business owners to have access to documentation since many have been displaced by the earthquakes.”

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