SBA PPP Round 2: What to know if applying for Paycheck Protection Program small business loans with new funding

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Small businesses are getting a second shot at receiving Paycheck Protection Program loans after the House passed an additional $310 billion in funds for the program on Thursday. President Trump is expected to sign the bill into law Thursday evening.

Funds from the first $349 billion ran out in record time (just 13 days), and banks and lenders have been learning as they go how to efficiently get money out the door. Now, with the PPP replenished, lenders say they’ve been preparing to get right back to work.

The big thing they’re all waiting on is the SBA’s processing system, E-Tran, to reopen and allow them to send applications through for approval. The SBA said in a statement that it “will resume accepting PPP loan applications on Monday, April 27 at 10:30 a.m. ET from approved lenders.”

Those like Sunrise Banks, a Minnesota-based regional bank, were able to process about $160 million in loans, across over 600 loans, before funds were cut short the first time. The bank’s CEO David Reiling tells Fortune they have about 3,000 applications backlogged, and are planning to tackle those the moment funds are approved and E-Tran is up and running again. The bank’s average loan size was about $260,000.

One thing the regional bank is doing differently for round two, says Reiling, is creating a new online application process, and inviting pending applicants to reapply through the system. “By having them go through this online process it really is an easy way for people to tidy up the application, get it accurate, and be able to flow through a lot faster,” he says. It will also help the bank weed out those who applied to multiple banks for the loan and may have already receive funding, he says.

Others like Republic Bank, based in Philadelphia and covering areas in Pennsylvania, New Jersey, and New York, have already processed $500 million worth of loans that have assigned SBA numbers or have been funded, with another $350 million in the queue awaiting the new funds. The bank’s plan of attack, chairman Vernon Hill tells Fortune, is to immediately load processed applications into the SBA system, and then move on to a smaller group who are continuing to apply now and being loaded into the bank’s system. “We’ve been backed up for weeks, so you’re going to get a flood” as round two opens, he says.

Seattle-based Washington Federal bank, meanwhile, has approved and funded roughly 2,000 applications before funds ran out from the first $349 billion. Now, Brent Beardall, the bank’s CEO, tells Fortune they’re ready to jump right back in and keep funding—but will start with the nearly 1,500 applications in their system’s queue before processing “in waves” the nearly 2,000 applications in the bank’s waitlist. “Whether that’s 500 people or 1,000 every 10 hours, we’ll see how it goes,” Beardall says. “Our hope and expectation is the technology has improved, both on the side of the banks and the SBA.”

Of note, fintechs are hoping to get in on this next round of lending, after being largely shut out from the first $349 billion due to a slow approval system to become SBA-approved lenders. Ryan Metcalf, head of U.S. regulatory affairs for Funding Circle, a U.K.-based fintech lender, tells Fortune the fintech has continued to pre-process thousands of loans to be ready for round two. But under current guidelines, Matcalf says the fintech will likely be referring applications to approved banks. “We have those lined up because it’s our Plan C and we don’t want small businesses to wait any more than they have to, so we’re going to make sure they get an equal shot at the funds,” he says.

However, some big banks like JPMorgan Chase are already alerting applicants to go elsewhere if they want to receive loans this time around, CNBC reported. The bank emailed thousands of customers late Wednesday that funds might run out before customers in Stage 1 of the process (the furthest behind of four stages the bank created) got funding. “We wanted to give you this information, so that you can decide if you would like to try applying with another lender,” the bank said.

How small businesses should apply for the PPP this time around

For those who didn’t apply for the PPP loan the first time around, the reality is, it may be more challenging to get a loan. Republic Banks’ Hill says “We tell them they might be late, but go ahead and apply and we’ll try to get it through.” The key is to put your business in the queue, bankers say.

But for those who are going to be applying now, lenders have a few tips on how to approach round two.

Sunrise Banks’ Reiling suggests first and foremost to go to your existing bank and ask them if they are still accepting new applications. For Sunrise Banks, “We’ve been trying to communicate and bend over backwards to make sure that all our customers are applying, and there will be a few stragglers, so the idea is have them check with their primary financial institution first, and then seek somebody else who is accepting,” Reiling says.

Now that many lenders have had a chance to work through kinks or inefficiencies in their programs, those like Reiling and Beardall are armed with info for PPP loan hopefuls: Make sure you have the essentials ready—your payroll figures, your rent and utility costs, but also think strategically. Due to the payroll or rehiring requirements to make the PPP loan forgivable, small businesses need to maintain payroll or rehire employees before June 30. In that sense, Reiling advises thinking about, “‘Am I bringing employees back on? Do I have to increase my headcount? What does my payroll look like now, what does it need to look like within a certain period of time?’ So be prepared to hire people.”

While it is likely the money from round two will run out before everyone in the banks’ backlogs and new applicants are funded, the key point to drive home, lenders say: “The more prepared our applicants are, the quicker they go through the process and the more applications we can process,” notes Washington Federal’s Beardall. “If [you are] a small business, you get in line—pick your bank and get in line and start working through it.”

How long will it last?

It’s difficult to predict how long the new funding will last this time around. Some bankers predict as little as one to two days, while others think 10 days or longer might be more realistic.

The consensus from lenders is that this time around is likely to be much smoother—but faster. “When this was launched [a few] weeks ago, it was kind of the Wild West for everybody—the banks and the SBA. That process has been refined,” says Beardall. But still, with all the backlogged applications, it’s clear to most, if not all banks: funds will probably dry up before they get around to everyone.

Adds Republic Bank’s Hill: “Are they all going to get funded? I don’t know.”

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Update, April 24: This article has been updated with a statement from the Small Business Administration.