Now That PPP Loans Have Ended, What’s Next?

Now That PPP Lending Has Ended, Biz2Credit Small Business Lending Index Finds May 2021 Loan Approval Rates Increase for Banks and Non-Bank Lenders



Small business loan approval percentages at big banks ($10 billion+ in assets) climbed slightly from 13.4% in April to 13.5% in May 2021, however, small banks’ approvals jumped higher from 18.2% in April, to 18.7% in May.

“Loan approvals by small banks rose 0.3% as banks start to assess the favorable economic conditions beginning to emerge as lockdowns ease and more and more people receive a COVID-19 vaccine,” said Biz2Credit CEO Rohit Arora, one of the nation’s leading experts in small business finance. “Pent-up demand from consumers is an attractive narrative for small business owners to use as part of their justification for applying for financing. Banks, especially smaller community and regional institutions, are taking notice of this trend as they begin to open up their lending operations to the post-pandemic reality.”


Next month’s lending figures will be significant now that the federal government’s Paycheck Protection Program (PPP) has completed its second round.

“Businesses that are still reeling from the economic impact of the pandemic will have to look for other sources of funding,” Arora explained. “Look for business loans — especially loans from online or digital providers — to see a jump in activity now that PPP is closed.”


Total nonfarm payroll employment rose by 559,000 in May, and the unemployment rate declined by 0.3 percentage point to 5.8 percent, the U.S. Bureau of Labor Statistics reported on Friday, June 4. Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance. Many of these jobs are created by small businesses.

Credit unions edged up from a 20.3% approval rate in April, to 20.4% in May 2021. However, other non-bank lenders inched up slightly. Institutional lenders approved 23.6% of funding requests in May, up slightly from 23.5% in April.

Meanwhile alternative lenders approved 24.3% of funding applications in May 2021, up from 24.0% in April.

“Alternative lenders saw a significant increase in approval rates in May while at the same time handling an ever-larger number of loan requests, thanks to the shift towards online finance in the small business space,” Arora said. “With the conclusion of PPP, banks are focusing on forgiveness and may not be ready to ramp up small business lending that is not government-backed.”

“Borrowers will have to turn to non-bank sources of funding, including alternative lenders, institutional lenders and credit unions,” he added. “These lenders are all starting to respond to the demand, and many will see their approval rates rise as customers who used to get loans from a bank are now looking to alternative sources of financing.”



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SBA stops accepting new PPP applications from most lenders as general funds run out

The U.S. Small Business Administration (SBA) has stopped accepting new Paycheck Protection Program (PPP) applications from most lenders almost a full month before the $292 billion program’s application deadline.

The SBA informed lenders Tuesday afternoon that the PPP general fund was out of money and that the only remaining funds available for new applications are $8 billion set aside for community financial institutions (CFIs), which typically work with businesses in underserved communities. The agency also has set aside $6 billion for PPP applications still in review status or needing more information due to error codes.

Congress in late March extended the PPP application deadline two months to May 31, in part to give the SBA and lenders time to resolve error codes that were holding up nearly 200,000 applications in the SBA’s PPP platform. The unresolved error codes were related to validation checks instituted by the SBA to help prevent fraudulent applications from being funded.

While the SBA has stopped accepting new PPP customers, there are still many options available for small business. Premier Business Lending can help to secure funding for today’s business owner.

Why a Small Business Loan Can Be a Smart Option?

There’s more to a small business loan than meets the eye. More than a line on your credit report, it’s also a smart investment in your business’ future. The best business loans fuel growth for your business without any hassle, so you have financial flexibility for your daily operations. A loan helps you cover expenses that not only keep your business running but can help you grow and expand. Whether you need to hire more employees or a short-term cash infusion to cover taxes, Premier Business Lending can help you determine the right financing solution for your small business.





paycheck Protection Program -ppp loan

The Treasury Department has reopened the Paycheck Protection Program (PPP)

The Treasury Department has reopened the Paycheck Protection Program (PPP), following new guidance on the small business forgivable loan program. The new terms aim to quell the earlier criticisms of the relief effort. Some 5,400 businesses have received about $520 billion to date, but the aid program has been plagued by confusion surrounding forgiveness eligibility and complaints that the smallest businesses were unable to gain access to much-needed support.

“Today’s guidance builds on the success of the program and adapts to the changing needs of small business owners by providing targeted relief and a simpler forgiveness process to ensure their path to recovery,” Administrator Jovita Carranza said in a joint press release issued last week by the Treasury and the Small Business Administration (SBA).


With the reopening of the PPP, community financial institutions will be given priority to submit applications to the SBA from businesses that previously were shut out or unable to apply. 


The SBA said it plans to open the program “to all participating lenders shortly thereafter,” according to a statement. The last day to apply for a first or second round PPP loan is March 31.

Who is Eligible for a Second PPP Loan?

Those seeking a second PPP loan must have:

  • Previously received a PPP loan and plan to or already have used the full amount for qualifying expenses.
  • No more than 300 employees
  • Experienced at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
  • Asked for no more than $2 million; the amount granted will be based on an applicant’s payroll


The eligibility criteria has changed for this round of funding. Notably, the eligible business size has dropped from 500 employees or less to 300 employees or less, which would make some businesses ineligible for a second loan even if they were approved for a first draw. 


And there’s some gray area when it comes to the requirement to show a 25% reduction in gross receipts for a quarter in 2020 versus the same quarter in 2019. 

PPP loan

2021 Updates to the PPP Program

As most businesses are aware, the rules governing PPP loans have been updated as part of The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (“Act”). The Act was just one section of the massive 2021 Consolidated Appropriations Act that was passed by Congress and signed into law by the President on December 27, 2020. To combat the ongoing disruptions caused by the COVID-19 pandemic, the Act generally provides (a) first time PPP loans for businesses that did not obtain a loan in the first instance, (b) PPP second draw loans for businesses that already obtained a loan but need additional funding, and (c) additional funding for businesses that returned their first PPP loan or did not get the full amount for which they qualified.

While further guidance from the Small Business Administration concerning the Act and implementation of second round PPP loans is expected, here are some of the more noteworthy updates and changes to the PPP loan program:

  1. Of the $325 billion appropriated under the Act, $284.45 billion has been allocated for PPP second draw loans.
  2. The PPP second draw loans are intended to target smaller and harder-hit businesses, and the rules for second draw loans are more restrictive to ensure the funds are provided to those businesses with the greatest need. In order to be eligible, the business must:
  • Employ no more than 300 employees;
  • Have used or will use the full amount of their first PPP loan prior to disbursement of the second draw loan; and
  • Be able to demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same quarter in 2019.

For businesses that were not in operation in 2019, additional eligibility rules are provided under the Act.

  1. Loan eligibility expanded for certain nonprofit organizations that do not receive more than 15% of their revenue from lobbying.
  2. In general, borrowers may receive a loan amount of up to 2.5 times the average monthly payroll costs in either the one-year prior to the second draw loan or calendar year 2019. For restaurants, hotels, and other establishments providing customers with lodging and/or preparing meals, snacks, and beverages for immediate consumption (businesses with NAICS code beginning with 72), the loan amount is 3 times the average monthly payroll costs. Second draw PPP loans are capped at a maximum amount of $2 million.
  3. In addition to payroll costs, covered mortgage, rent, and utility payments, the Act makes the following additional expenses allowable uses and eligible for forgiveness:
  • Covered operations expenditures – payment for any software, cloud computing, and other human resources and accounting needs.
  • Covered property damage costs – costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
  • Covered supplier costs – expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to operations at the time at which the expenditure was made.
  • Covered worker protection expenditure – personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.
  1. For forgiveness, the 60%/40% cost allocation between payroll and non-payroll will continue to apply. However, PPP borrowers may now include additional group insurance payments as part of their covered “payroll costs.” This includes insurance plans such as vision, dental, disability and life insurance.
  2. Allows the borrower to elect a “covered period” within which to spend the loan proceeds. The covered period may end at the point of the borrower’s choosing, which can be any length between 8 and 24 weeks after origination of the PPP loan. Recall that first draw PPP loan borrowers had little flexibility and were required to choose either an 8- or 24-week covered period.
  3. To apply for a second draw loan, the borrower must submit to its lender SBA Form 2483-SD (Paycheck Protection Program Second Draw Borrower Application Form) or the lender’s equivalent form. The documentation required to substantiate payroll cost calculations is generally the same as documentation required for first draw PPP Loans.
  • However, no additional payroll cost documentation will be required if the borrower uses 2019 payroll cost documentation consistent with what was presented for its first draw PPP loan, and obtains its second draw loan from the same lender.
  • For loan amounts greater than $150,000, the borrower will be required to document the 25% revenue reduction. Documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, quarterly financial statements or bank statements.
  1. The Act simplifies the forgiveness application process for borrowers who have received, or will receive, PPP loans in an amount of $150,000 or less. Here, full forgiveness is available if the borrower submits a certification in a 1-page form to be finalized by the SBA.

Premier Business Lending is working with the SBA in order to secure funding for business owners. Follow the link below and apply online. Once we receive your inquiry a finance consultant will reach out to you immediately to walk you through the next steps.


Paycheck Protection Program (PPP) 

Paycheck Protection Program (PPP) 

Loan forgiveness information


Many businesses are relieved to have received PPP funds but are now concerned they may not  receive forgiveness. The two primary causes for concern are: 1) not using the loan proceeds  properly, and 2) not documenting the correct use of funds adequately. These are common  concerns, and we are here to help. Whereas we have received some guidance and information  from the SBA and US Treasury Department, we await finalized guidelines. While we wait for  the final rules, we wanted to help by sharing what we know now. 

Please keep in mind that the information contained in this article is based on our current  understanding. Even though we will be updating you with other PPP-related information as it  because available, we ask that you do not solely rely on this information to make your  financial decisions. It is best for you to engage legal counsel and advice from CPAs and other  financial professionals. 

How Does Forgiveness for PPP Loans Work? Below are the three primary source documents that summarize the entire program. 

  1. The CARES Act
  2. The SBA’s PPP Interim Final Rule
  3. Supplement to the Interim Final Rule for self-employed borrowers
  4. Apply Now

In summary, once your business is approved for the loan, the lender has 10 days to send you  the money. All loan proceeds spent in the first eight weeks from the date that the money was  distributed are eligible to be forgiven as long as they are used for approved expenses. To be  fully forgiven, a minimum of 75% of the loan amount must be spent on payroll, and a maximum  of 25% may be spent on utilities and business lease, rent, or mortgage payments. 

Sometime after the eight-week period has passed, the lender will allow the borrower to apply  for forgiveness. The lender will have up to 60 days to respond to the request for  forgiveness. Because all principal and interest payments are deferred for the borrowers for the  first six months, any unforgiven loan balances will be termed out for a period of 18 months at a  1% simple interest rate.

What Documentation Is Needed to Apply for  Forgiveness? 

We advise all businesses to carefully and transparently document their PPP loan uses—both for  use during the forgiveness application, but also for the future in case the government decides  to audit any past borrower. The SBA does not accept stories, explanations, or excuses—only  evidence. The CARES Act states that borrowers applying for forgiveness must submit  documentation verifying the number of FTE employees on payroll and pay rates for the periods,  including: 

  • Payroll tax filings reported to the Internal Revenue Service; and
  • State income, payroll, and unemployment insurance filings; 
  • Documentation, including canceled checks, payment receipts, transcripts of  accounts, or other documents verifying payments on covered mortgage obligations, payments on covered lease obligations, and covered utility payments.
  • A certification (stating) that— 
  1. The documentation presented is true and correct; and
  2. The amount for which forgiveness is requested was used to retain  

employees, make interest payments on a covered mortgage obligation,  

make payments on a covered rent obligation, or make covered utility  


Forgiveness Includes Employment Taxes 

The SBA stated, “Under the [CARES] Act, payroll costs are calculated on a gross basis without  regard to (i.e., not including subtractions or additions based on) federal taxes imposed or  withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act  (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are  not reduced by taxes imposed on an employee and required to be withheld by the employer,  but payroll costs do not include the employer’s share of payroll tax.”

For example, an employee who earned $4,000 per month in gross wages, from which $500 in  federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive  $3,500, and $500 would be paid to the federal government. However, the employer-side  federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the  statute. 

Premier Business Lending is doing our part staying abreast to the new PPP loans coming to  fruition as we speak. If you would like more information on the PPP loan, please do not hesitate  to reach out and speak to a finance consultant who will happily answer any questions you may  have.  

Apply for your PPP Loan now: APPLY FOR MY PPP LOAN

Premier Business Lending cannot provide legal, tax, or accounting advice. You should consult your own  counsel, accountant and other advisors to evaluate your individual facts and circumstances in connection with  your PPP loan and the forgiveness process.