Senate approves $310 billion in new SBA PPP loan money. What you should know

Small businesses and lenders have been waiting with bated breath for news of additional funding for the Small Business Administration’s Paycheck Protection Program, and now Senate Republicans and Democrats have reached a deal on Tuesday for a bill approving over $480 billion in additional coronavirus relief. The bill was passed in the Senate on Tuesday afternoon, and the House could approve the bill as early as Thursday.

In addition to new funding for hospitals, testing, and SBA disaster relief loans, the new package includes $310 billion for the PPP, with $250 billion refilling the program and $60 billion set aside specifically for smaller institutions like credit unions and community banks. That latter $60 billion is key in getting funds to smaller banks and lenders (according to the bill, $30 billion to institutions with between $10 billion and $50 billion in assets, and the other $30 billion to institutions with less than $10 billion in assets).

Many small businesses were outraged over the weekend that large franchises and chains like Shake Shack and Ruth’s Chris Steak House received $10 million loans, while so many smaller businesses were still waiting for their applications to be approved. The provisions for smaller lenders to receive delineated funds could help address these smaller businesses’ needs. A portion of the new funds would be sent “exclusively to the unbanked, to the minorities, to the rural areas, and to all of those little mom and pop stores that don’t have a good banking connection and need the help,” Senate Minority Leader Chuck Schumer told CNN Tuesday.

Ever since funds for the original $349 billion Paycheck Protection Program ran out on Thursday, the government has been pushed to allocate additional funds for the program. According to the SBA, the program secured loans for over 1.6 million small businesses.

Issues plagued the rollout of the program, which was designed to provide small businesses with up to $10 million loans, that could convert to grants, to help keep employees on the payroll. A variety of hitches, including intermittent outages of the SBA’s processing platform E-Tran, and a slow start on getting non-SBA lenders (like fintechs) approved made it difficult for some businesses to access the program. Initially, without those kinds of lenders able to extend loans, “ironically, the very small businesses who are the ones … most at risk from this economic crisis and least resilient … are going to be the last ones in line to get money because they’re not existing bank customers, and their lenders who they trust and rely on are not able to access the program,” John Pitts, head of policy for fintech Plaid, recently told Fortune.

Other small businesses ran into problems with bigger banks like Bank of America when applications were opened, given the fact that many banks initially prioritized current lending and business customers first. Others had better luck with smaller lenders: Leah Sherrill recently told Fortune she got a $84,900 loan approved for her Texas-based preschool and childcare center on Thursday (“not a second too soon!”) from her regional bank American Momentum, just as funds for the program were running out.

Additional funding would mean other regional banks like Sunrise Banks, based in Minnesota, could continue funding smaller companies in their area. Small businesses are “our bread and butter—This is our backyard, our neighborhood, our fabric of our community,” Sunrise Banks’ CEO David Reiling recently told Fortune.

Those smaller businesses might have a better shot at getting funding this time around, as Sen. Schumer told CNN Tuesday that “We insisted that a chunk of the money be separate from the competition with the bigger companies, you know the ones that have two, three, 400 people and a relationship with the banks,” Schumer said. 

Other smaller banks like Atlantic Union Bank, a regional bank based in Virginia, were able to approve over 6,500 applications worth over $1.4 billion before funding ran out, but still have a pileup of applications awaiting another funding round. The bank has about $18 billion in assets, which could fall into the category delineated by the Senate for that $60 billion specified for smaller lenders. But even with a new funding round, “The real question in my mind is, if after the second round of funding, there is still great demand from the program from the traditional businesses that qualified, the smaller ones, will Congress support a round three of funding? I hope they will,” Atlantic Union Bank CEO John Asbury told Fortune.

The coronavirus relief bill will also include $50 billion for Economic Injury Disaster Relief (EIDL) loans and $10 billion for EIDL grants, $75 billion for hospitals, $25 billion for testing, and $2.1 billion for Small Business Administration administrative expenses.

More must-read finance coverage from Fortune:

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—China’s next coronavirus crisis: What happens after a country closes its economy
—This time, the banks were ready: How the Big Four prepared to survive the coronavirus
How the American economy can recover from the coronavirus pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
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