The latest round of the Paycheck Protection Program began accepting applications this month, and banks across Nevada tasked with processing the loans for small businesses are reporting a steady pipeline of demand.
The federal program, which offers potentially forgivable loans to small businesses that keep employees on payroll, relaunched this month with $284 billion and is open to all lenders and borrowers.
“Bankers are very busy processing PPP applications for Nevada businesses,” Nevada Bankers Association president Phyllis Gurgevich said Monday. “As expected, there are some glitches in the application process, as well as some changes in application guidance.”
Numbers coming in
Gurgevich said that while it’s still too early for local data on the PPP “second draw,” banks across the Nevada are reporting “strong demand” for the loans after the U.S. Small Business Administration — which administers the funds along with the U.S. Department of Treasury — began accepting applications last week.
Nevada State Bank has processed more than 2,800 PPP applications with nearly 400 loans funded as of Monday.
“The initial response has been strong, and we expect that to continue,” said Nevada State Bank spokeswoman Sandi Milton. “Our combination of technology and helpful bankers was a very successful formula in Round 1, and we anticipate that to continue for Round 2.”
Wells Fargo spokesman Anthony Timmons said Monday the bank has already received more than 1,500 PPP applications from Nevada businesses. So far, those PPP applications total nearly $82 million in funding and would save nearly 10,000 local jobs.
Nationally, Wells Fargo has completed 60,000 PPP applications for a total of over $3.4 billion. The vast majority of the PPP pipeline, at 80 percent, were applications from small business owners who were filing for the second time.
Smaller lenders, such as Summerlin-based Lexicon Bank, also have seen many PPP applications working their way through the SBA pipeline.
Leo Moschioni, executive vice president and chief credit officer at Lexicon Bank, said that since the bank began accepting PPP applications last Friday, it already has 120 loans approved by the SBA.
“That represents about $24 million in loans,” said Moschioni. “It’s moving pretty well and we have another 28 loans, for $4.5 million, that are waiting to be approved by the SBA.”
Gurgevich, of the Nevada Bankers Association, said this new PPP round “is quite different than the first round, which seemed to be set up like a race. Approval was almost instantaneous in the previous round, allowing lenders to move immediately toward funding the loan.”
For this new round, Gurgevich said there is a built-in delay of one to three days between submitting an application and getting it approved.
New PPP rules
But unlike last year — in which the $659 billion loan program created last March under the CARES Act brought two installments of PPP funding in 2020 after the $349 billion first round exhausted in less than two weeks — some lenders say the $284 billion “second draw” program is seeing steady demand.
“We’ve seen less participation, partly because some companies don’t qualify like they may have last year,” Moschioni said. “It’s a little bit slower than we expected originally.”
With the new PPP funding, there are stricter rules: Businesses can have a maximum of 300 employees, down from 500, and the maximum loan amount this time is $2 million, a decrease from $10 million. Borrowers are also required to prove that they lost revenue by at least 25 percent in any quarter in 2020 compared with the previous year.
“Some companies did find a lot of success last year, while others really struggled,” said Moschioni. “In the case of a restaurant, versus a delivery service, you’re going to have a wide range of income gaps that cause people to not be able to participate this time around.”
Getting the word out
Lexicon Bank, which was founded in 2019, said its high-touch experience and personalized services allowed it to “dramatically expand” its clients in the first PPP wave.
“Although we have one location, one of the key things about being a community bank is being able to be very nimble throughout this process,” said CEO Stacy Watkins.
“To be able to pick up the phone and call somebody to say, ‘Hey this is the president of the bank,’ or ‘This is your relationship manager,’ is huge when there’s a lot of unknowns and uncertainty in our local community,” added Watkins. “We don’t hide behind a 1-800 phone number or an email. We’re here in the market, we’re open, and we’re available after hours if needed.”
Watkins said the bank spoke with SBA officials on Monday, who told her that there’s still $250 billion outsanding in PPP funds.
“There’s a lot of hesitation in the market to go out, so we’re encourage clients to go out and they can do that with us,” said Watkins.
Banking leaders are also doing outreach to small businesses about the PPP “second draw.”
“NBA is conducting outreach to chambers of commerce and other business groups, as well as state and federal officials and really any group that may have questions or know of businesses that are unsure how to apply,” said Gurgevichh, adding that its members “are happy to participate in Q&As to help anyone interested in applying for a PPP loan, determining if they are qualified and ensuring that they can receive assistance through the program.”