RICHMOND, Va. -- Virginia’s banks, big and small, are preparing to provide loans from the federal government’s $284 billion set aside for the subsidized Paycheck Protection Program small business loans.
Treasure Secretary Steven Mnuchin said in a news release that they updated the guidance to enhance the PPP’s targeted relief to small businesses most impacted by COVID-19.
Emilia Sparatta, operator of the restaurants Heritage and Southbound, nearly missed out on the first round of loans offered in the Spring.
“We knew we really needed that first round of funding and it was frustrating that first time,” she explained. “The process with our larger bank took much longer and we were worried we’d run out of time.”
Some banks didn’t participate in the first round, while others were inundated with applications. Richmond-restaurant Nota Bene owner Victoria DeRoche told Richmond Bizsense in December that she closed her business after failing to secure her own PPP loan.
“I did not have that to fall back on. That is 100 percent why this is not working. It would have been $82,000 and there was an issue with a pending loan from the Small Business Association (SBA) that was attached to my tax ID number, which prevented me from getting PPP,” DeRoche said.
Now, many of the remaining surviving small businesses in Virginia may be eligible for their first or second PPP loan thanks to additional funding from Congress.
John Asbury, CEO of Atlantic Union Bank based in Richmond, said the institution made more than 11,000 PPP loans totaling $1.7 billion during the first phase.
“The banks were given about five days to prepare for it,” Asbury told CBS 6. “We had about 1,000 people working on this.”
Businesses who received a PPP loan in 2020 may be eligible for additional funding. Asbury said the SBA should begin receiving and processing applications within the next few weeks.
“If you have fewer than 300 employees and importantly you can demonstrate any quarter of 2020 that your revenue declined by 25 percent or more you’re likely eligible for a second PPP loan,” Asbury explained.
The first-draw of PPP loans will also be reinstated so small businesses who missed out the first time can reapply. Businesses with 500 or fewer employees are eligible.
Asbury said COVID-19 expenses and vandalism as a result of the riots over the summer can now be covered. Sixty-percent of the loan must go to payroll, while the remaining dollars can be used for rent and those additional expenses.
Eighty-five percent of PPP loans that Atlantic Union Bank provided were under $150,000. Those loans could be forgiven by filling out a one-page form proving the business used the funds like instructed.
“I can’t think of a good reason for any business that’s eligible, I can’t think of a good reason why they don’t want it,” Asbury explained. “It is a grant structured as a government loan. The government doesn’t want you to pay it back.”
Organizations such as Chambers of Commerce and some media outlets, like local television, radio and newspapers are now eligible to apply.
Virginia banks processed nearly 110,000 PPP applications totaling $12,611,135,107 as of June 30, according to the Small Business Administration.
Nearly 4.9 million loans were made nationwide totaling $521 billion. Sparatta did receive her first PPP loan, but funds quickly ran out. She planned to apply for a second loan.
“We will certainly put in the maximum of what we can but at this point anything, anything we receive is put to good use,” she said.