URGENT PPP UPDATE: larger banks may hit their max and be cut off

IMPORTANT UPDATE FOR 2021: Congress has approved an extension of the PPP loan program. Applications may be submitted to SBA until May 31, 2021, including “second draw” PPP loans for businesses that received PPP funding in 2020. New rules also prioritize smaller community lenders to further assist struggling small businesses and underserved communities


In this 2-minute read:

  • New SBA / PPP rules as of 4/26/2020 set a max per lender of 10% of the available “pot” of money
  • Larger banks may hit their maximums and be cut off from further PPP loan approvals
  • It is unlikely that smaller lenders will hit their maximum

On Sunday, April 26, the SBA and Treasury announced that they are instituting a maximum dollar amount of 10% of PPP funding authority that any single lending institution can originate

This means banks and lenders with larger pools of PPP loan applications may be cut off at some point. The E-Tran system started processing loans again for the second round of PPP funding, totaling $310 billion, on Monday, April 27, 2020. 

This could mean many businesses who’ve had their PPP applications approved by larger lenders won’t get funded. If you’re concerned about this possibility, you can apply via a smaller lender. 

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If I have submitted my PPP application via a large lender who may hit their maximum, should I reapply with a smaller lender?

The SBA added a rule as of April 26, 2020 that caps each lender at 10% maximum access to PPP funds. The technical implementation details aren’t clear (and could be complex). 

However, as a result of the SBA’s system updates and details of how the additional rounds of PPP funding are allocated, you now have almost no risk of receiving more than one loan for the same tax ID number. 

bank overwhelmed by PPP loan applications

Given the feeding frenzy that usually occurs every time the as the E-Tran system opens again for PPP applications, we think it might be a good idea for you to take the extra time to start your PPP application with at least one of the smaller SBA 7(a) approved lenders Womply is working with.

It’s more work for you (and for us) but it could make the difference between getting approval during this round of funding or not. 

Remember: you are not obligated to apply with your bank and the terms everyone receives on the PPP are identical—and it is always free to apply.

If my bank is overwhelmed with PPP applications, how will I get my loan?

How each lender handles excess applications is up to them. It’s possible they might direct them in the background to other lenders, tell their customers to apply elsewhere, or do nothing and hope the government approves more money and their customers might get funded at that time.

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