Virginia banks helped companies secure vital PPP loans
With small businesses struggling to tread water during the early, unpredictable days of the pandemic, the U.S. Small Business Administration in early April 2020 launched the initial $349 billion Paycheck Protection Program (PPP) relief fund to provide forgivable loans to help businesses stay afloat.
Eligible businesses could use the funds to meet payroll costs and pay mortgage interest, rent and/or utilities payments. Banks were swamped with applications from businesses that were furloughing and laying off employees. The initial round of PPP funding, which provided 1.7 million loans, was tapped out after only 13 days.
Before it was exhausted, Virginia banks processed more than 40,000 applications totaling nearly $9 billion, according to the Virginia Bankers Association. Prior to the establishment of the PPP loans, there were only 1,700 SBA-approved lenders in the United States. That number nearly tripled in less than two weeks to 4,700. The 11 Virginia-based credit unions that offered PPP loans processed 1,112 loans, totaling $126 million in the first round of PPP funding, according to the Virginia Credit Union League.
The federal government allocated an additional $320 billion PPP funding round in late April 2020. Approximately 113,000 businesses in Virginia (including Virginia Business Media LLC) collectively received $12.5 billion funding during the first two funding rounds. Small and midsized banks wrote most of the loans, while larger banks including McLean-based Capital One Financial Corp., reported encountering difficulties in processing the high demand for the popular loans.
Sixteen Virginia companies, including Lorton-based fast food chain Five Guys Enterprises LLC, received the maximum $10 million in PPP loans.
Large corporations such as Arlington-based digital media company Axios Media Inc., Shake Shack, Ruth’s Chris Steak House and AutoNation came under fire for receiving large loans intended for the smallest businesses. In May 2020, Axios announced it was returning $4.8 million it had received in PPP funding. Although the company is under the 500-employee threshold for PPP loan eligibility, it is backed by tens of millions of dollars in venture capital.
After months of federal negotiations, the relief loan floodgates reopened this January, as the SBA opened an additional $284.5 billion round of PPP funding.
This time, borrowers who received allocations during the initial rounds of PPP funding in 2020 could reapply under Second Draw PPP Loan applications. First Draw PPP Loans are for borrowers who had not received a loan before Aug. 8, 2020, while the Second Draw PPP Loans are aimed at assisting eligible businesses with 300 or fewer employees.
As of Jan. 31, the SBA had approved 891,044 loans worth $72.7 billion for the latest PPP round. Virginia banks had processed 16,549 loans totaling more than $1.5 billion, according to SBA data released in early February. For 2021 PPP loans made as of late January, the average loan size was $82,000, with the maximum loan amounts still set at $10 million.
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