After the initial $349 billion funding of the Paycheck Protection Program dried up in record time early this month, congress has approved and the president has signed into law a second round of relief that includes an additional $310 billion of funding for the small business lifeline program. Many restaurants applied the first time around but did not receive funding, in part due to smaller businesses’ lack of access to traditional banking avenues. Some large restaurant groups that received loans are even returning their PPP funds in the wake of heavy public pressure. Regardless of how the first round went, it is a sure thing that the second round of funding will be tapped out just as quickly, if not even faster.
In an effort to level the playing field for the upcoming second round of applications, the SBA has approved numerous non-traditional lenders to process loan applications for small businesses. The most well-known of these lenders include QuickBooks provider Intuit, payment processors Square and PayPal, and alternative lender Kabbage. These companies already work closely with many smaller operators, who may have better luck submitting their PPP application with one of these lenders than with a large traditional bank. For example, the average PPP loan issued during round one was $240,000. The average loan approved through Square was $7,000, illustrating the reality that these fintech lenders are serving the smallest, and arguably most needy businesses.
If your restaurant missed out on funding over the last couple of weeks, now is the time to get organized for round two. It is expected that the SBA will begin accepting applications on Monday, April 27, and you will want to get in touch with your lender as soon as possible. As far as choosing a lender, if you do not already have a solid relationship with an SBA approved institution, you may want to consider getting in touch with one of the newly approved fintech lenders. Kabbage for example is accepting applications from businesses that are not already existing customers and is only processing loans of up to $2 million. This further illustrates that these lenders are focused on the smaller operations, as PPP loans can be issued for as much as $10 million.
Following is a current list of SBA approved fintech lenders that you may want to consider, as well as whether they are accepting all applications, or from current customers only. Please keep in mind that this environment is constantly and rapidly evolving, and this list is subject to change at any time:
- PayPal (current customers only)
- Intuit (current customers only)
- Square (current customers only)
- Funding Circle
- Ready Capital
To reiterate, it is critical that your restaurant begins the application process as soon as possible for the best chance at receiving funding from round two. For more information on the current issues and developments on the Paycheck Protection Program, be sure to register for our upcoming webinar on Wednesday, April 29.
Austin Bradley, CPA