North Bay banks begin next round of PPP lending

North Bay businesses may again tap into their area banks to apply for Paycheck Protection Program, or PPP loans.

As part of the $2.3 trillion federal relief package signed into law last month that also includes $110 billion in tax benefits, the $284 billion lending mechanism represents the second wave of PPP loans available to companies trying to survive amid the COVID-19 economic upheaval.

The SBA opened up the process to PPP-eligible lenders with $1 billion or less in assets for companies seeking either their first or second round of funding.

First in line: CDFIs

The first group of loans could be submitted through “community financial institutions” starting on, according to the SBA. These are defined as community development financial institutions, which are designed to promote economic vitality in distressed communities. CDFIs, which use SBA form 3507, receive a designation from the federal government that enables small businesses in low-income and minority-based communities to gain access to capital.

The process runs through March 31.

“The PPP will open to all participating lenders shortly thereafter,” the SBA reported.

“We’ll be up and running sometime next week,” Exchange Bank Chief Credit Officer Michael Sullivan said earlier of his Santa Rosa bank’s preparedness.

Its customers will apply through a portal that will be ready next week. Like the process in the first round of funding more than six months ago, communications and document sharing will be handled electronically.

“As soon as it’s open, we’ll announce it on our website,” Sullivan said.

The bank processed more than 1,700 loans for North Bay businesses in the first round. Over three-quarters of these loans were classified in worth as under $150,000.

Bank of Marin also reported it had handled more than 1,800 around the San Francisco Bay Area. The bank’s Chief Operating Officer Tim Myers is awaiting “the required application forms” and “necessary guidance.”

What’s different this time with PPP loans

Key differences this time around include an allowance for the business to receive forgiveness on the loan and take the expense as a write-off — a corporate maneuver the Internal Revenue Service eliminated during the first wave of loan funding. The IRS called it “double dipping.”

Another change involves 501(c)(6) organizations to apply for loans.

For requirements, borrowers with fewer than 300 employees may be eligible for second draws of PPP funding if they met the criteria from the first.

SBA Administrator Jovita Carranza, along with U.S. Treasury Secretary Steve Mnuchin, has referred to the program as an “economic lifeline to millions of small businesses.” The program’s intent was to provide funding for businesses to keep at least three quarters of its staffing levels.

The PPP funding program has provided 5.2 million loans valued at $525 billion to save 51 million jobs at U.S. businesses, the SBA added.