Local small businesses are about to line up again for federal dollars to help them through the pandemic, and this time the emphasis is on companies that missed out before and those classified as disadvantaged, as well as micro-businesses, membership-based nonprofits and hospitality-type enterprises such as restaurants.
Monday's kickoff of phase three of the U.S. Small Business Administration's Paycheck Protection Program will accept loan applications from qualified businesses and nonprofits providing they didn't get a PPP loan last year and their paperwork is filed through a community development financial institution. These are private banks usually catering to poor or underserved communities including minorities, women and veterans.
On Wednesday the process will open to all qualified businesses — even those that received a PPP loan last year — as long as their application goes through a CDFI. On Friday that final restriction lifts and applications will be accepted from all qualified businesses going through any participating bank or credit union.
The first two PPP rounds provided close to $1 billion in forgivable loans to Kern businesses. More than half a trillion dollars was given out nationwide to help prop up the economy during the pandemic.
Local lenders say there's still plenty of demand for PPP loans among Kern's small-business community. They point to changes from the last round that, though more restrictive in some instances, offer greater help to businesses like restaurants that have suffered most.
"There continues to be great need," said Geraud Smith, president and CEO of Bakersfield-based Valley Republic Bank, a local PPP lender. He foresees strong interest among mom-and-pop businesses and salons, as well as small enterprises that didn't get a PPP loan last year for whatever reason.
HELP FOR UNDERSERVED
A local effort has formed to spread word of the new opportunity among business owners in underserved populations.
As part of that, there will be a one-hour webinar starting at 3 p.m. Monday focusing on local small businesses that have had trouble finding capital during the pandemic. Anyone can sign up at free at www.tinyurl.com/yxzhy5xr.
Joining to put on the event are Kern County’s Black and Hispanic chambers of commerce, Mid State Development Corp. and the Small Business Development Center at Cal State Bakersfield, which noted that new SBA guidance asks PPP lenders to ramp up their help to eligible businesses owned by minorities, veterans, women and others who have been underserved.
"Now more than ever, it’s important for small businesses, especially minority owned businesses to take advantage of federal, state and local funds and resources," Jay Tamsi, president and CEO of the Hispanic chamber, said in a news release. "Businesses can take away from this webinar the resources which will best fit their needs, understand the process and move quickly to aid their business."
People familiar with the new guidelines say businesses that received a PPP loan last year will only qualify this time if they can show a year-over-year sales decline of at least 25 percent in 2020.
In another change, qualified businesses within certain classifications reserved for restaurants and hospitality businesses this time can receive 3½ times their average monthly payroll. Last time the limit was 2½.
Also different this time are loan limits — $2 million this time instead of the $10 million before — and employee-count caps: Last time businesses with up to 500 workers qualified, but starting Monday the limit is 300.
Also, $25 billion has been set aside in this PPP round just for "micro-businesses" employing 10 people or less. And while membership-based nonprofits didn't qualify last time, they may this time.
Local financial institutions say they're ready to go.
Buoyed by a "strong response" from its previous borrowers, Bakersfield-based Valley Strong Credit Union said it's going all in for small businesses, not just in Kern but also in its new markets in Kings and Tulare counties. It has set up an internet page, valleystrong.com/ppp, with information about the program and an online link to loan application materials.
Smith at Valley Republic said his bank will once again open applications to existing customers and newcomers alike.
"We're prepared to fill the demand whatever it is," Smith said.
The director of the local SBDC, Kelly Bearden, sounded enthusiastic about local small businesses qualifying for PPP loans regardless of whether they received money during the last two rounds.
"It's going to be great," he said.