The Small Business Administration’s Paycheck Protection Program (PPP) reopened Monday with revamped rules and guidelines.
The third round of the loan program is prioritizing applications from small community financial institutions on the first days of reopening.
The early access to smaller lenders could help minority and women-owned businesses that ran into challenges accessing the funds during the first two rounds of the PPP program.
“I thought I was going to be able to get it from a traditional lender but it didn’t happen,” Jessica Modkins said.
Modkins is the president of Hip Rock Star Advertising. She says that despite having accounts at two large well-known banks, she had to look elsewhere for a company to administer a loan from the SBA’s PPP program.
“I had direct access to account managers, VPs at the bank, but it did not work. It didn’t. So we ended up going with another lender out on the West Coast that I would not think of as a banking institution. It ended up being a lender for the loan that administrated it for us,” Modkins said.
It’s the type of story Shaheewa Jarrett with the Broward County’s Black Chamber of Commerce says she has heard from other minority business owners.
“Although they had relationships of 10, 15, 20 years with a bank, they had an account, they soon realized they did not have a quote, unquote relationship,” Jarrett said.
According to an Associated Press analysis of the SBA data, there were delays in when many minority business owners received the loans compared to when many white business owners got their money.
It is difficult to determine how many minority-owned businesses received PPP funding in Florida because businesses were not required to disclose that information on the SBA’s application and many didn’t.
When NBC 6 Responds analyzed the data, we found of the 423,141 PPP loans handed out in Florida, only around 2% of them went to businesses that self-identified as being minority owned.
But the new rules for the third round of PPP funds aim to close this gap.
According to new guidance from the SBA, only loan applications from community financial institutions will be accepted for at least the first two days. The administration will also work to match loan inquiries with small lenders.
There’s also money that has been set aside for businesses with 10 employees or less and for loans under $250,000.
“As black business owners if we don’t have reserves, if we don’t have the ability to reach out to investors to support us during times like this, then we would unfortunately have to close our doors,” Modkins said.
Like most business owners, Modkins is now looking toward the future and hoping the next round of PPP money will help local businesses pivot and stay open.
“We have to stop thinking about where we were before March 19and figuring out how we can embrace the new normal, if you figure out how you fit into that plug, how you are a solution for right now then you will be successful,” Modkins said.
We reached out to the SBA about the number of minority businesses to receive PPP loans during the first two rounds of the program but are still waiting to hear back.
In a recent news release, the SBA said “27 percent of PPP funds went to low and moderate income communities,” with $130 billion going to businesses in historically underutilized business zones.