SBA

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.

First Internet CEO David Becker used to be dismissive of the Small Business Administration. But after getting to know some of the borrowers during the pandemic — and after his bank collected hefty fees from selling 7(a) loans — he's become a convert.

By an overwhelming majority, the House approved a two-month extension of the Paycheck Protection Program, which still has almost $93 billion left to distribute.

The legislation would extend the Paycheck Protection Program for two months and give the Small Business Administration more time to remedy persistent system glitches that have delayed the processing of thousands of loan applications.

Legislators expressed concerns that thousands of pending applications are stuck in limbo just weeks before the Small Business Administration is legally required to stop accepting them.

Nonbanks had worried the end of the Paycheck Protection Program Liquidity Facility would hurt their ability to lend to small businesses. On Monday, the Federal Reserve announced the facility would be extended for three months.

Turnaround times on loans in the 504 program are stretching out for weeks as the Small Business Administration grapples with a spike in applications and responsibilities tied to the Paycheck Protection Program.