Make PPP round 2 seamless — refer new loans and stay focused on banking.
Congress has passed the Emergency Coronavirus Relief Act, including a $285 billion extension to the Paycheck Protection Program. The newly-approved legislation provides eligible borrowers the opportunity to take a second PPP loan.
While the new act delivers needed relief to American small businesses, many lenders who are still processing PPP forgiveness are seeking a referral partner for the wave of PPP originations expected. By referring PPP loans to a servicing partner, banks can earn referral fees, eliminate risk, and avoid ongoing servicing.
New PPP loans and rules
Small businesses that obtained an initial PPP loan qualify for an additional round, however, eligibility for a second PPP loan is stricter than before. Not only will a borrower need to document and establish a significant drop in revenue, but they must also have a limited number of employees.
- Borrowers must employ 300 or fewer employees and demonstrate at least a 25% reduction in gross receipts in any quarter of 2020 compared to the same quarter in 2019. For example, Q3 2020 revenue less than Q3 2019 revenue by 25% or more. Borrowers may choose the quarters for comparison but must be the same quarter of 2020 and 2019.
- Two methods are used to determine loan amount: (1) 2.5x average monthly payroll cost during the 12-month period prior to the loan, and (2) application date 2.5x average monthly payroll cost for 2019.
Most small business borrowers who received PPP loans within the first round of relief-funding are currently applying for forgiveness. The process can be time-consuming and complicated, no matter the loan amount, requiring lenders and borrowers to connect frequently for document gathering and application corrections. The new legislation extends the popular simple forgiveness form for PPP loans $50,000 and less, however, many banks prefer an expert servicing partner to reduce burden and risk.
Lenders need a PPP partner
ACAP is a PPP service provider, experienced in originating and servicing PPP loans. By referring new PPP loans to ACAP, lenders can accelerate referral fees, eliminate risk, and get back to their core banking services. Solely focused on PPP, the ACAP team works closely with banks to relieve PPP burdens and ensure equal access and program fairness. Make PPP 2.0 seamless – refer new PPP loans and stay focused on banking.