PPP loan program reopens with revised rules to end fraud

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On Monday, the government was set to reopen its pandemic assistance program for small businesses with $ 284 billion in new funds and revised rules to get money to businesses most in need while stamping out the fraud and abuse.

The Small Business Administration announced Friday that it will launch a third round of the paycheck protection program this week, starting with small community financial institutions on Monday, and large lenders in the coming days.

By prioritizing small lenders, the SBA hopes to respond to criticism from lawmakers that minority and women-owned businesses did not receive enough money in the first two PPP rounds last year compared to to large companies.

Administration officials told reporters on Friday they expected sufficient funds to meet demand.

Under the program, lenders, on behalf of the government, distribute loans that can be canceled provided the money is spent on eligible costs, such as payroll and rent. To date, the PPP has distributed $ 525 billion through more than $ 5 million in loans.

Congress authorized the new funds last month as part of yet another pandemic stimulus package, which also relaxed P3 rules on who can get money and what it can be spent on.

Among the main changes, companies that took cash in the first two rounds will be granted a second PPP loan on the condition that they can show a 25% impact on their revenue. To address concerns about fraud, the SBA is also introducing new due diligence checks.

While lenders say the changes are positive, some fear they may cause initial problems, especially since the updated application forms and SBA rules guidelines were not released until Friday.

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