Small businesses in Arkansas have borrowed $720.4 million in the current funding round of the Paycheck Protection Program as the initiative enters its final weeks toward a scheduled closing of March 31.
Beginning in January, the U.S. Small Business Administration renewed the coronavirus relief program to focus on businesses not reached in the initial Paycheck Protection Program funding round in 2020.
Through mid-February, 13,898 small businesses in Arkansas have received loans. The average amount is $51,834, according to the SBA's Arkansas office.
"SBA is reaching more eligible borrowers this round. However, our work is not done," said Edward Haddock, director of SBA operations in Arkansas. "We have until the program deadline of March 31 to continue to educate and help direct borrowers to lenders that can process their loan applications."
Nationwide, 1.7 million loans valued at $125.74 billion have been approved since January. All program loans are 100% forgivable and do not have to be repaid if businesses use the money to pay employees and for essential expenses including protective equipment.
On Monday, President Joe Biden's administration announced it would update the program beginning Wednesday in an effort to "further promote equitable relief for America's mom-and-pop businesses."
Key changes include establishing a 14-day, exclusive Paycheck Protection Program loan application period for businesses and nonprofits with fewer than 20 employees. That period starts Wednesday.
The changes also carve out $1 billion to direct toward sole proprietors, independent contractors and self-employed individuals. The effort is part of a plan to reach more women- and minority-owned businesses.
"These actions will help to lay the foundation for a robust and equitable recovery for small businesses across the country," the news release said.
The program allows for second loans to businesses that received funding last year, but only after they have spent their initial loan and if they have fewer than 300 workers and can demonstrate they experienced a 25% reduction in gross receipts during any quarter in 2020 compared with the same quarter in 2019.
Armor Bank, a community lender based in Forrest City, has made 30 new program loans since January – all to small businesses that also borrowed money when the program rolled out last year.
The 30 loans average about $150,000 per borrower, said bank Chief Executive Officer Chad May.
The program has helped the bank, which has about $265 million in assets, broaden its client base. Last year, Armor made about 160 program loans and 35% went to new clients.
"We're seeing businesses that have been most impacted by covid return for funding," May said. "The people that got funding in round one last year used the money as an important part of their stabilization plan. They were ready to come back in this round because they knew the importance of the program and how it could help them."
SBA's Paycheck Protection Program process was criticized last year for lending to larger businesses and because its system shut down because of heavy loan requests being submitted in short periods of time. The relaunched program has run much more smoothly, May said.
"In the first round there was a heightened sense of urgency in needing funds -- it was very frenetic," he said. "Businesses were unnerved in the first round of funding because there was a lot of uncertainty around the economy.
"Now businesses are not as unnerved, but they're still being impacted financially and want to take advantage of the available funds and keep people employed."
In the current round of funding, which has $284 billion available, loan volume in Arkansas is below expectations, Haddock said. "We are running slightly below our per-capita loan volume; since we make up about 1% of the population we should see about 1% of the total loans approved, or about 16,700 loans," he said, referring to the 13,898 loans made since the relaunch.
"Some of the approval delay can be attributed to security enhancements required by (statutes) to help reduce fraud and verify identity prior to issuing loan approvals. However, teams across the country are working diligently to clear those delays."
Combined with last year's Paycheck Protection Program lending, 64,677 small businesses in Arkansans have received just more than $4 billion in loans.
Across the U.S., more than 6.8 million loans have been approved since the program launched last April for a total of $126 billion.