SBA

There's still a month left in the federal government's fiscal year, and the Small Business Administration's 504 program is perilously close to hitting its congressionally mandated funding limit for new loans.

The agency's new platform can reach a decision on Paycheck Protection Program loan reimbursement in minutes and has handled hundreds of thousands of applications since its Aug. 4 debut. The original process required a lengthy form.

Borrowers with Paycheck Protection Program loans of up to $150,000 will be able to apply for forgiveness directly through a government portal if their lender opts in. Industry representatives welcomed the move.

Though the Paycheck Protection Program is winding down, the Small Business Administration has prolonged several other pandemic relief programs. Community banks can help local businesses sort through their options.

The Small Business Administration’s sluggish pace in forgiving the biggest Paycheck Protection Program loans is straining relations between banks and some borrowers.

The Paycheck Protection Program has about $8 billion remaining, with those funds earmarked for community development financial institutions, minority depository institutions and other mission-driven lenders.

With the Paycheck Protection Program likely winding down at the end of the month, many lenders are seeing heightened demand for the Small Business Administration’s 7(a) and 504 loans.

The legislation, led by Sen. Ben Cardin, D-Md., would qualify many farmers, ranchers and self-employed Americans for more Paycheck Protection Program funds.

When it was launched a year ago, the program was criticized for glitches and a focus on larger borrowers. Since then technical improvements have been made, smaller loans have been prioritized, and other changes favored by lenders have been implemented.

A federal watchdog agency determined that Almena State Bank's push into government-backed loans, supported with high-cost wholesale funding, set it up for collapse when significant credit issues arose.