Banks brace for third round of PPP loans

Mid-Columbia lenders are ready to begin processing a new wave of Paycheck Protection Program loans.

As a third edition of the popular forgivable loan ramped up in mid-January, local lenders said they would apply the lessons they learned from the first two but stood ready to respond to their customers, defying word that some lenders were beset by “PPP fatigue.”

Congress first authorized the PPP program in the Coronavirus Aid Relief and Economic Security Act then extended it through the 2021 Consolidated Appropriations Act, signed into law shortly after Christmas.

New borrowers and some businesses who received PPP loans in 2020 could begin applying for the new round the week of Jan. 11, according to the U.S. Small Business Administration and Treasury Department.

The latest round includes $284 billion for more easily forgivable PPP loans, according to an analysis by the National Credit Union Administration, a federal entity. The bill also allows some businesses to apply for a “Second Draw” loan and simplifies the process to apply for loan forgiveness for loans of $150,000 or less.

The bill reserved $30 billion for loans made by community development financial institutions and by institutions with assets of less than $10 billion.

Mid-Columbia lenders say they are ready for the new wave of applications. They reject the “fatigue” argument, though they acknowledge they were plenty busy when the coronavirus relief bill took effect last spring.

In the first two rounds, lenders issued 5.2 million loans totaling more than $525 billion, sometimes under crushing application volumes. The government calculates it supported more than 51 million jobs.

The crushing demand led to decidedly unbankerly hours – seven-day work weeks and late nights that extended past midnight. But local lenders are undaunted.

“We don’t have any fatigue to speak of. We’re most concerned with helping our members get through this crisis,” said Mike Shortell, assistant vice president for the SBA lending team for Numerica Credit Union, which has branches in each of the Tri-Cities.

Michael Shortell

It processed about 1,000 loans worth a combined $85 million over three months. It was an “unprecedented” effort to master a new program with changing rules. Shortell said the 2021 round should be smoother.

“We understand the rules a lot better,” he said. “I don’t think it’s going to be chaotic in the next round.”

Last spring, Numerica attempted to get ahead of the program by studying the bill itself. It had to adapt once the SBA issued rules.

“We learned not to get too far ahead of the rules last time,” he said.

Until the rules are available, it is difficult to confirm who is eligible for the latest round, although it is tailored to smaller businesses this time around.

The new PPP program earmarks billions for small businesses and authorizes a “Second Draw” program for some businesses to secure a second PPP loan. The bill includes language to help smaller businesses that got shut out the first time, many of whom did not apply.

Community First Bank, which serves the Tri-Cities, expected to open its application portal on Jan. 13.

Eric Pearson, president, expects an orderly roll out compared to 2020.

Eric Pearson

The first rounds were marked by a rush to apply for limited funds. For 2021, he said the SBA is taking a “metered” approach, with restrictions on how many applications it takes and how fast it processes them. Funds won’t be exhausted.

“Everyone will have a chance to apply,” he said.

There may have been fatigue from the unrelenting application process in 2020 and then the crush of forgiveness applications, but it has dimmed, Pearson said.

“We see it as so important for our local business community and economy, there’s no way we’re not going to participate,” he said.

Susan Horton

Wheatland Bank, another major PPP lender in Eastern Washington, is ready to go as well, said Susan Horton, president.

Wheatland expects to process up to $50 million in PPP loans, she said.

And STCU, the Spokane-based credit union with three Tri-City branches and a growing local presence, completed about 1,200 PPP loans in 2020. The effort included helping smaller unions process member applications as well.

It is ready for the latest edition.

“We’ll be ready. We’ll be ready to help them,” said Dan Hansen, spokesman.

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