Local banker weighs in on round two of Paycheck Protection Program

The latest Covid-19 economic stimulus package, signed into law by President Trump in late December, provides for another round of the Paycheck Protection Program (PPP) that proved to be a lifeline for thousands of small businesses across the country during the initial months of the coronavirus pandemic. 

Some $284 billion has been allocated to the latest round of PPP, which is again facilitated by the Small Business Administration in conjunction with participating banks and credit unions. It opened to applicants Jan. 11 and runs through March 31. This time, $2 million is the limit for each loan, as opposed to $10 million in the first phase of PPP. 

The Catalyst spoke with Bank OZK Vice President Barclay Harless, the bank’s St. Petersburg market leader, about what local businesses should know about the second iteration of PPP before they apply. (Bank OZK, headquartered in Little Rock, Ark., bought out St. Petersburg-based C1 Bank in 2016.) Harless is also chairman of CareerSource Pinellas and vice chairman of the St. Petersburg Downtown Partnership, and he recently penned a column for the Catalyst about why he’s bullish on St. Pete in 2021.

First and foremost, obtaining a loan from the first round of PPP does not preclude businesses from being eligible for more funding. 

“Existing PPP borrowers can request to modify their original loan amount,” Harless said, and they “are now eligible for a second draw on a new PPP loan, but they must have used the full amount [of the first loan] only for authorized uses.” 

Examples of authorized uses include payroll and rent, he added. PPP loans are fully forgivable if at least 60 percent of disbursed funds are used to cover payroll. 

However, some eligibility criteria have changed, particularly for businesses seeking a second-draw PPP loan. According to the latest guidelines issued by the SBA, applicants for second-draw loans must have fewer than 300 employees and be able demonstrate a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020. 

According to Harless, it’s vital that business owners reach out to their bank, credit union or other lender as soon as possible if they want to apply for a PPP loan. The SBA updates its PPP guidelines every few days so it can be difficult for a layperson to keep up. For example, 501(c)6 organizations are now eligible, meaning chambers of commerce and destination marketing associations can apply. 

“In the first round,” he said, “this was a completely new program from the SBA. This was a completely new program for the banks. It came from out of nowhere, right? Because this entire economic crisis essentially came from out of nowhere.” 

Harless could not confirm whether Bank OZK would participate in the second round of PPP, but said the SBA can provide a list of institutions that will process loan applications. U.S. Rep. Charlie Crist, D-St. Petersburg, issued a statement Tuesday that said applications from Black- and minority-owned businesses will be prioritized this week at local Community Development Financial Institutions and Minority Depository Institutions. Those institutions include: 

• Black Business Investment Fund
• Catalyst Community Capital
• Florida Community Loan Fund
• Grow Financial
• GTE Federal Credit Union
• Republic Bank, St. Petersburg
• Suncoast Credit Union

“As a result of the most recent COVID relief package,” Crist stated, “there will be a fresh infusion of $284 billion into the Paycheck Protection Program (PPP) to help businesses keep their doors open and employees on payroll, with a specific emphasis on helping Black-owned businesses.”

For more information, visit the SBA website.