COLORADO SPRINGS — The $284 billion third round of Paycheck Protection Program (PPP) loans reopened as of Monday for new borrowers and certain existing PPP borrowers.
However, a study by the Associated Press found that minority-owned businesses received past PPP loans much later than white business owners.
In this third round, the program is designed a bit differently, in order to try and prioritize small businesses. "The Small Business Administration and this Economic Aid Act recognize some of the faults from before," said the Executive Director of the Pikes Peak Small Business Development Center, Aikta Marcoulier.
Marcoulier helped explain the process for the third round of PPP loans. It can be a complex system, with businesses telling Marcoulier they are confused or overwhelmed when trying to apply. "Between federal, state, and local grants, sometimes it's hard to even find the button to apply," said Marcoulier.
She said there is a first draw for businesses that have never received the loans, with 500 employees or less, and that can prove a loss of income.
In the second draw, businesses that have already gotten a PPP fund and are looking for another one can apply. In this instance, the Small Business Administration is focusing on those with 300 employees or less.
Through Friday, banks or lenders that have one billion dollars or less in assets have been allowed to provide first or second draw applications, which Marcoulier said typically supports minority-owned small businesses. "There's $15 billion that's being set aside for the first draw, and $25 billion for the second draw, and it's focused on those businesses that have ten employees or less. So, we're talking our small businesses, which is really, really important, because as we know our minority-owned businesses lacked access to these funds, and we're ensuring that these community financial institutions, community banks, are those that are sustained with the funds," said Marcoulier.
On Tuesday of next week, all eligible lenders will be open to PPP applications for both the first and second draw.
Spice Island Grill has been serving Colorado Springs for nine years. Co-Owner of the Jamaican restaurant, Claudette Hutchinson, spent over two decades in the Air Force. Their restaurant got PPP money in the first round of payments, and she said they also plan on applying for this third wave. "The first round was helpful once we got shut down, and everything kind of pretty much dried up for like a month or two... Now, there's more confidence with the vaccine and everything, that the next time we really open back up, it's time to hit the ground running," said Hutchinson.
Hutchinson also said small businesses may face more obstacles than larger operations when it comes to applying for PPP loans. "Some of the roadblocks are the qualification factors, you may not have three years of tax returns... Fancy stuff that bigger businesses have, small businesses don't typically have that. And maybe you're not able to hire an accountant. So, a lot of those factors I think play into why smaller, micro, businesses are not able to go after that funding because of all the requirements," said Hutchinson.
Meanwhile, Red Leg Brewing Company said they submitted their application for the third set of PPP loans on Friday. The President and Founder of the company, Todd Baldwin, said they got thousands from the first round of payments. "It really ensures we can pay for our houses, we can pay for groceries, we can pay for childcare, all those important things that our employees rely on. And it allows us to continue to move forward and invest, not only in their futures, but our community as well," said Baldwin.
Baldwin said many in the service industry feel as though they were an "easy target" for the government during this pandemic. "It's really great to see the federal government step up, and say 'hey, let's make sure these guys are there.' Because community cultures are defined and maintained by small businesses," said Baldwin.
In addition to the third round of PPP loans, the deadline for Economic Injury Disaster Loans was extended from December 31, 2020 to December 31, 2021. Marcoulier said the primary focus of this loan is to support businesses in low-income neighborhoods. However, she said an exact definition of what businesses qualify for this has not been finalized or released.
Then, the Shuttered Venue Operators Grant is for businesses like venues, museums, or zoos, which can get grants of up to $10 million. These grants are not open yet, but Marcoulier said it's important for businesses to prepare their finances now, in order to be ready.
In Colorado, Marcoulier said the state legislature allocated money from the Department of Local Affairs funds for local governments to apply for and turn into grants. The Pikes Peak Area Council of Governments applied for the money, and is expecting multi-million dollar grants for El Paso County. The grants are intended for industries that have been impacted the most by the pandemic, like restaurants, restaurants in hotels, bars, breweries, wineries, distilleries, caterers, move theaters, and fitness centers. It does not matter if a business has received a grant in the past, and these will operate on a tiered system. They are administered through the Colorado Enterprise Fund, and applications are open until January 29. CLICK HERE to find the application.
Marcoulier said all of these grants mentioned are bridge funds, but they will not solve a long-term financial problem. She stressed the importance of preparing for disasters, and said the Pikes Peak Small Business Development Center is ready to help businesses do that.
Marcoulier also added that there are very mature scams circulating related to these funds. Businesses should be aware of the scammers, and pay attention if something does not seem right.
Here are important dates and deadlines regarding financial assistance as provided by the Pikes Peak Small Business Development Center:
SBA Paycheck Protection Program – 1st and 2nd Draw
Open through March
SBA Economic Injury Disaster Loans
Plan to open on January 17th
Through December 31, 2021
Pikes Peak Small Business COVID-19 Relief Program
Closes January 29th
SBA Lending Enhancements
SBA Drought Application
Closing in February
SBA Shuttered Venue Operator (SVO) Grants
Not open yet
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