Boston Fed creates guide for small businesses seeking Paycheck Protection Program loans
Bank’s community development arm works to help small businesses, nonprofits land critical funding
The stark economic effects of the COVID-19 pandemic have forced many small businesses and nonprofits to rely on the emergency loans offered by the federal Paycheck Protection Program just to stay afloat. That’s why the Boston Fed’s community development team launched a guide to steer small businesses through the process.
“We know that small businesses are fundamental to the New England economy,” said Prabal Chakrabarti, senior vice president and community affairs officer at the Boston Fed. “We know access has been hard, and the registry provides some concrete direction.”
The Paycheck Protection Program offers billions of dollars in potentially forgivable emergency loans through the U.S. Small Business Administration to eligible small businesses and nonprofits that agree to keep employees on payrolls. The program was launched in early April to help enterprises of 500 or fewer employees, and the initial $349 billion in funding was soon depleted. On April 23, Congress voted to reinfuse the program with $310 billion in additional funds.
The Boston Fed’s community development arm anticipated this second round of funding. Understanding that many smaller businesses, especially those without strong existing banking relationship, were facing obstacles accessing the program, the department worked quickly to compile helpful information and resources, so small businesses and nonprofits could take advantage of it. The information the Boston Fed gathered includes:
- A resource page on bostonfed.org with information on program eligibility and the application process
- A list of technical assistance providers, compiled after soliciting help from organizations with deep knowledge of the Paycheck Protection Program
- A registry of lenders with the capacity to process the program’s loans for non-customers.
Chakrabarti said the community development staff focused their outreach broadly on networks of nonprofits and small businesses, but also paid particular attention to businesses owned by people of color and/or located in low- and moderate-income areas. He said the information and listings will be updated in coming days, as the team continues its outreach to regional financial institutions.
Leader Bank in Arlington, Mass., is a lender listed on the Boston Fed registry. CEO Sushil Tuli said that, as of Tuesday evening, the bank had obtained SBA guarantees for more than $54 million in loans in the Paycheck Protection Program’s second round.
During the program’s first round, Leader ran two shifts and obtained SBA approvals for 92 percent of applicants in amounts ranging from $1,000 to $3 million, Tuli said. As part of the second round, Leader was able reserve SBA funds Monday and Tuesday for applicants who weren’t successful in the first round, but later reapplied with the bank.
“Small business owners are very dear to my heart, as I started Leader Bank as a small business owner,” Tuli said. “We know how important these businesses are to their owners and communities, and we are proud to help as many members of our community as we can in these challenging times.”
The Small Business Administration runs the Paycheck Protection Program, but the Federal Reserve established the Paycheck Protection Program Liquidity Facility under section 13(3) of the Federal Reserve Act to bolster the effectiveness of the program.
The facility extends credit to eligible financial institutions that originate Paycheck Protection Program loans, taking the loans as collateral at face value.