There are still options for borrowing for small businesses despite the end of the PPP program

The Salary Protection Program (PPP) was seen as a treasure chest when it was launched a year ago to help small businesses overcome the economic catastrophe that caused the coronavirus pandemic.

But troubled companies have already hit rock bottom.

Last week the Small Business Administration (SBA), in charge of the program, said that money for conventional banks has already run out, ahead of the planned cutoff date of May 31.

“We didn’t expect to spend that money at the time,” said Herbert Austin, district director for the SBA’s Dallas-Fort Worth office.

Lending institutions in Texas ranked third in number of PPP loans granted with 460,000, for a total of $ 20.5 billion, behind only California and New York.

But small businesses that didn’t get loans have other options.

The first is that there is still about $ 9 billion of the PPP that the SBA has set aside for minority depository institutions and community development finance institutions that can make loans to businesses.

“The program is not totally over,” Austin said. “It’s still open up to a point.”

The program of Disaster Economic Displacement Loans (EIDL) to help companies affected by the pandemic is also working, and its deadline was extended until December 31, 2021.

Those more conventional loans are less popular because they are not forgivable like PPP ones.

In March, the EIDL loan limit was raised to $ 500,000 from the previous limit of $ 150,000, which many companies found very little.

It takes about 20 minutes to fill out the application, Austin said.

Businesses that have only received $ 150,000 can apply for more now that the limit has been raised.

“The ideal would be to apply for the PPP to cover payroll and then apply for the EIDL to cover the cost of keeping the business operating,” Austin said.

The SBA also designed disaster loan programs specifically for restaurants and precincts, which were among the worst hit in a year in which people were asked to stay in their homes, said Chris Jones, executive vice president of Texas Security Bank.

The 13-year-old Dallas bank, with $ 900 million in assets, delivered just under 1,000 PPP loans totaling $ 250 million in the first round and 525 loans totaling $ 125 million in the second.

Venue owners presenting live events and other related businesses can request resources from the Closed Venue Operators Fund, which has more than $ 16,000 million, of which $ 2,000 is reserved for businesses that have no more than 50 employees.

If approved, businesses can receive grants equal to 45% of their gross earned income up to a maximum of $ 10 million.

For restaurant operators, the SBA opened its Restaurant Revitalization Fund for $ 28.6 billion on May 3, which provides funds of up to $ 10 million.

The SBA says that program has already been in “extremely high demand.”

In its first two days, 186,200 restaurants, bars, food trucks and other businesses in the industry applied for the fund.

In the first three weeks, priority is given to companies owned by women, veterans and the socially and economically disadvantaged.

Jones says he has been encouraged to see clients who received PPP loans through Texas Security Bank survive the pandemic.

“There are going to be pitfalls and setbacks to get out of this, but, for the most part, I’ve seen big improvements in our clients’ businesses,” Jones said.

“I’m not saying we’re out of this already, but we’ve been seeing big improvements.”

Banks have seen their relationships with new customers increase dramatically through PPP.

Frost Bank says its new relationships in Dallas grew 47% in 2020.

Some banks that participated in the program continued where the PPP left off.

Comerica Bank of Dallas, which operates primarily in Texas, Michigan, Arizona, California and Florida, recently announced a commitment of $ 5 billion in small business loans for the next three years.

“Now that the PPP is exhausted, it is more important than ever that we participate in supporting small business loans,” said Cassandra McKinney, Comerica executive vice president of commercial banking.

Comerica signed about 20,000 loans totaling nearly $ 4 billion in the first round of the PPP, but has yet to count the second round.

Disaster loans like PPP and EIDL have been the center of attention in the past year, but Austin says entrepreneurs shouldn’t forget conventional loans, which were the most widely provided by the SBA before the pandemic.

Even amid the chaos, new small businesses are opening every day, he added.

“The American dream of starting a business is still very much alive,” Austin said.

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